HARYANA POWER PURCHASE CENTRE versus SASAN POWER LTD. & ORS on 6 April 2023

HARYANA POWER PURCHASE CENTRE

v.

SASAN POWER LTD. & ORS.

(Civil Appeal No. 11826 of 2018)

APRIL 06, 2023

[K. M. JOSEPH AND B. V. NAGARATHNA, JJ.]

Electricity Laws – Appellate Tribunal for Electricity (APTEL)and Central Electricity Regulatory Commission (CERC), ifempowered to disregard the express words of a contract and createa new bargain – Held: In a case where the matter is governed byexpress terms of the contract, it may not be open to the CentralElectricity Regulatory Commission even donning the garb of aregulatory body to go beyond the express terms of the contract –While it may be open for a regulation to extricate a party from itscontractual obligations, in the course of its adjudicatory power itmay not be open to the Commission by using the nomenclatureregulation to usurp this power to disregard the terms of the contract– The Appellate Tribunal for Electricity cannot indeed make a newbargain for the parties – The Tribunal cannot rewrite a contractsolemnly entered into – It cannot ink a new agreement – Suchresiduary powers to act which varies the written contract cannot belocated in the power to regulate – The power cannot, at any rate,be exercised in the teeth of express provisions of the contract – In amatter where the parties have entered into a contract with expressprovisions, it cannot be said that the Tribunal would have power todisregard the express provisions of the contract on the score that asit turns out that with passage of time and even change incircumstances, it is found that the contract cannot be worked exceptat a loss for the contractor – Contract.

Electricity Act, 2003: s.79 – Power Plant Project – SpecialPurpose Vehicle – Power Purchase Agreement (PPA) – Compensationdue to ‘change in law’ – Special purpose vehicle formed to set upan Ultra Mega Power Project – Power generated by the successfulbidder was to be supplied through procurers/distribution licensees(appellant) – Petition u/s.79 of Electricity Act read with the statutoryframework governing procurement of power through competitive

1

A

B

CD

EF

G

H

Abidding and Articles 13 and 17 of the PPA for compensation due tochange in law ‘during the construction period’ – Held: The mattermust be viewed from the prism of the specific provisions definingthe change in law and the actual change in law – On facts, the PPAcontemplates that if the seller is affected by change in law andwishes to claim change in law, it has to notify the procurers of theBchange in law as soon as is reasonably practicable after becomingaware of the same – There is no material made available indicatingthat the procurers have held out that they will be liable – It couldnot be a change in law as contemplated in the agreement as it wasnot a change in initial consent which was the only case which wasCargued in this regard – Parties were clear about how the change inlaw had to be compensated and methodology has been set out clearly– Therefore, any appeal made to the general part in Article 13.2which speaks about the affected party being restored to the sameeconomic condition as if such change in law had not occurred cannotresult in departing from the specific formula which has been set inDplace – If a certain timelimit is crossed by the procurers in theperformance of its obligations in this regard, the seller (the firstrespondent) has been given the right to repudiate the contract – Itis not the case of the first respondent that it purported to repudiatethe contract – On the other hand, it is the common case that theEcontract continued to be alive and it has survived subject to theclaims which have been raised thereunder – This would mean thatas the consequences of failure to perform the task having beenprovided in the contract in the manner provided, one should notordinarily tarry further to ask as to whether this would provide thepremise for a change in law as contemplated under Article 13.1.1 –FEven in terms of the case built around Part II of Schedule 2 to thePPA under which the performing of the task mentioned in Article3.1.2A within the time provided was to be treated as a deemed initialconsent, the consequence of failure to do that have been expresslyspelt out – At best or at worst, it could have empowered the firstGrespondent to rescind the contract – The first respondent has notbeen able to demonstrate that there was a change in law.

Doctrines / Principles – Principle of contra proferentem –Explained – Held: The principle of contra proferentem is ordinarilyutilised in contracts of insurance and standard form contracts –HThe principle apparently in substance is that in case of any doubt in its terms, the doubt should be resolved against the party whodrafted the contract.

PTC India Limited v. Central Electricity RegulatoryCommission (2010) 4 SCC 603 : [2010] 3 SCR 609 –held inapplicable.

Energy Watchdog v. Central Electricity RegulatoryCommission and Others (2017) 14 SCC 80 : [2017]3 SCR 153 and Uttar Haryana Bijli Vitran Nigam Ltd.& Anr. v. Adani Power Limited & Ors. (2019) 5 SCC325 : [2019] 4 SCR 487 – relied on.

Gujarat Urja Vikas Nigam Ltd. v. Essar Power (2008)4 SCC 755 : [2008] 4 SCR 822; Skandia InsuranceCo. Ltd. v. Kokilaben Chandravan & Ors. (1987) 2 SCC654 : [1987] 2 SCR 752; DLF Universal Limited v.Director, Town and Country Planning Department,Haryana (2010) 14 SCC 1 : [2010] 15 SCR 85;Sumitomo Heavy Industries v. Oil and Natural GasCommission of India (2010) 11 SCC 296 : [2010] 9SCR 176; Nabha Power Limited v. PSPCL (2018) 11SCC 508 : [2017] 14 SCR 301; Prahlad & Ors. v. Stateof Maharashtra & Anr. (2010) 10 SCC 458 : [2010]11 SCR 916; State of Punjab & Ors. v. Bakshish Singh(1998) 8 SCC 222 : [1998] 1 Suppl. SCR 478; MahantDhangir & Anr. v. Madan Mohan & Ors. (1987) (Supp)SCC 528 : [1988] 1 SCR 679; Uttar Pradesh PowerCorporation Limited v. National Thermal PowerCorporation Limited and Others (2009) 6 SCC 235 :[2009] 3 SCR 1060; Gujarat Urja Vikas Nigam Limitedv. Tarini Infrastructure Limited and Others (2016) 8 SCC743 : [2016] 5 SCR 990 and Manohar Lal Sharma v.Principal Secretary & Ors. (2014) 9 SCC 614 : [2014]12 SCR 110 – referred to.

Case Law Reference

[2017] 3 SCR 153[2019] 4 SCR 487[2008] 4 SCR 822

A

E

F

G

H

[2023] 8 S.C.R.

CIVIL APPELLATE JURISDICTION : Civil Appeal No.11826Of 2018.

E

From the Judgment and Order dated 20.11.2018 of the AppellateTribunal for Electricity, New Delhi in Appeal No.121 of 2015.

With

Civil Appeal Nos.11927, 12190 of 2018, 1670 Of 2019, 12232 ofF2018 and 1742 of 2019

G. Umapathy, P. Chidambaram, M.G. Ramachandran, RanaMukherjee, Sajan Povayya, Sr. Advs., Rohit K. Singh, Anand K.Ganesan, Ms. Poorva Saigal, Nikunj Dayal, Shubham Arya, Amal Nair,Ms. Kritika Khanna, Ms. Pallavi Saigal, Ms. Reeha Singh, Ms. ShikhaGSood, Ms. Anumeha Smiti, K. V. Mohan, K.V. Balakrishnan, Ravi Nair,Rahul Kumar Sharma, Rakesh K. Sharma, Rajiv Srivastava, NishantSharma, Ms. Gargi Srivastava, Ms. Adviteeya, Ms. Aparna Bhat, AmitKapur, Pukhrambam Ramesh Kumar, Rahul Kinra, Aditya Ajay, KarunShrama, Girdhar Gopal Khattar, Ms. Aliva Ahmed, Ms. Raksha Agrawal,Ms. Divyya Kaul, Hasan Murtaza, Advs. for the appearing parties.

H

The Judgment of the Court was delivered by

K. M. JOSEPH, J.

(1) The six appeals with which we are concerned have been filedunder Section 125 of the Electricity Act, 2003 (hereinafter referred to as‘Act’ for brevity). The appeals are directed against the order passed bythe Appellate Tribunal for Electricity (hereinafter referred to as ‘Tribunal’for brevity) in an appeal carried by the first respondent under Section111 of the Act.

(2) The appeal before the Tribunal, in turn, was lodged against theorder passed by the Central Electricity Regulatory Commission(hereinafter referred to as ‘Commission’ for brevity). The Commissionpassed the order purporting to be one under Section 79(b) inter alia ofthe Act in a petition filed by the first respondent.

FACTS

(3) It was decided to set up an Ultra Mega Power Project. Towardsthis end, the Power Finance Corporation Limited of India was to be thenodal agency. It incorporated a Special Purpose Vehicle, which is thefirst respondent. The idea was to set up the Ultra Mega Power Projectwhich would be operated by the successful bidder selected through aninternational competitive bidding. The power generated by the successfulbidder was to be supplied through procurers (the appellants before us),who can be described also as the distribution licensees under the Act.The appellants were to supply the power so procured finally to theconsumers.

(4) Since what was contemplated was seeking shelter underSection 63 of the Act, we must refer to the guidelines which have beenissued by the Central Government purporting to act under Section 63.Guidelines were issued on 19.01.2005. We deem it appropriate to set outthe following guidelines:

“2.1 These guidelines are being issued under the provisions ofSection 63 of the Electricity Act, 2003 for procurement of electricityby distribution licensees (Procurer) for:

(a) long-term procurement of electricity for a period of 7 yearsand above; (b) Medium term procurement for a period of upto 7 years butexceeding 1 year.

B

C

D

E

F

G

H

A2.2 The guidelines shall apply for procurement of base-load andseasonal power requirements through competitive bidding, throughthe following mechanisms:

i. Where the location, technology, or fuel is not specified by theprocurer (Case 1); B

ii. For hydro-power projects, load center projects or other locationspecific projects with specific fuel allocation such as captive minesavailable, which the procurer intends to set up under tariff basedbidding process (Case 2).”

(5) The guidelines are binding on the procurers. Guideline 3.2Cwhich is related to preparation for the invitation of bids would assumerelevance. It reads as follows:

“3.2 For long-term procurement from hydro electric projects orfor projects for which pre-identified sites are to be utilized (Case2), the following activities should be completed by the procurer orDauthorized representative of the procurer, before commencing thebid process:

- Site identification and land acquisition required for the project

- Environmental clearance

E- Fuel linkage, if required (may also be asked from bidder)

- Water linkage

- Requisite Hydrological, geological, meteorological andseismological data necessary for preparation of Detailed ProjectReport (DPR), where applicable.F

The bidder shall be free to verify geological data through his ownsources, as the geological risk would lie with the project developer.

The project site shall be transferred to the successful bidder at adeclared price.

G

Provided that for the projects from which more than one distributionlicensees located in different States intend to procure power andif the preparations for such projects are being facilitated by theCentral Government, the activities referred to above shall beinitiated before the bidding process and should be completed beforesigning the power purchase agreement with the selected bidder.

H

(6) Under the guidelines, tariff structure is contemplated whichconsists of capacity charges and energy charges which are dealt with indetail. It also deals with bidding process. The bidding process itself isdivided into two stages, viz., a determination of the qualification by apre-qualification system and thereafter submission and consideration ofessentially what consists of the financial bid. There is a guideline whichdeals 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 IndianArbitration and Conciliation Act, 1996. The ADR shall bemandatory and time-bound to minimize disputes regarding the bidprocess and the documentation thereof.

If the ADR fails to resolve the dispute, the same will be subject tojurisdiction of the appropriate Regulatory Commission under theprovisions of the Electricity Act 2003.”

(7) It is, accordingly, purporting to act in terms of the guidelineSthat a Request for Qualification (for short RFQ) came to be issued on31.03.2006. Reliance Power Limited was one of the bidders which waspre-qualified in terms of the RFQ. On 18.08.2006, there was a changenotified in the guidelines. It brought about the following changes in theguidelines 5.17 besides guideline No. 4.7. The unamended and theamended guidelines 4.7 and 5.17 read as follows:

AB

C

D

E

F

G

H

A(8) On 21.08.2006, a Request for Proposal, for short RFP, cameto be issued. We deem it appropriate to refer to the following provisionsof the RFP.

“4. While this RFP has been prepared in good faith, neither theProcurers, Authorised Representative and Power FinanceBCorporation Limited (PFC) nor their directors or employees oradvisors/consultants make any representation or warranty, expressor implied, or accept any responsibility or liability, whatsoever, inrespect of any statements or omissions herein, or the accuracy,completeness or reliability of information contained herein, andshall incur no liability under any law, statute, rules or regualationsCas to the accuracy, reliability or completeness of this RFP, even ifany loss or damage is caused to the Bidder by any act or omissionon their part.

1.3 The objective of the bidding process is to select aSuccessfulBidder for development of the Project as per the termsDof the RFP. The Project will have a Contracted Capactiy ofminimum of 3500 MW and maximum of 3800 MW in accordancewitht he terms of the PPA. The Selected Bidder shall purchasethe entire shareholding of the Authorised Representative fromPFC and its nominees in accordance with Share PurchaseEAgreement and cause the Seller to enter into the RFP ProjectDocuments. The Selected Bidder shall be responsible for ensuringthat the Seller undertakes development, finance, ownership, design,engineering procurement, construction, commissioning, operationand maintenance of the Project as per the terms of the RFP ProjectDocuments. The Selected Bidder shall also ensure:

F

(i) All equipment and auxiliaries shall be suitable for continuousoperation in the frequency range of 47.5 to 51.5 Hz (-5% to +3%of rated frequency of 50.0 Hz).

(ii) The plant shall be capable of delivering contracted capacitycontinously at 47.5 Hz grid frequency.

G

1.4 The Procurers through the Authorised Representative, haveinitiated development of the Project at Sasan, District Sidhi,Madhya Pradesh and shall complete the following tasks in thisregard by such time as specified hereunder:

H

iv. Allocation of main Captive Coal Mine(s) and providinggeological report (GR) for the same; at least ninety (90) daysprior to Bid Deadline. Allocation of other Captive Coal Mine(s)and available information regarding quality and quantity of coal(GR related information) would be made available at least thirty(30) days prior to Bid Deadline. The Seller shall pay the final costof geological reports (Grs). The Indicative Cost of geologicalreports (Grs), would be made available at least thirty (30) daysprior to bid Deadline;

v. Tying up water linkage for the Project requirement along withapproval of Central Water Commission, at least thirty (30) daysprior to Bid Deadline; Water intake study report and Project Report including geo-technical study, topographical survey, area drainage study, socio-economic study and EIA study (rapid) would be made availableat least ninety (90) days prior to Bid Deadline;

vi. issue of certificate by Ministry of Power, Government of Indiaextending the benefits to power generation projects under MegaPower Policy upto the Scheduled COD of the Power Station byGovernment of India at least thrity (30) days prior to Bid Deadline;

It may be noted that noe of the Procurers, AuthorisedRepresentative and PfC, nor their directors, employees or advisors/consultants make any representation or warranty, express orimplied, or accept any responsibility or liability, whatsoever, inrespect of any statements or omissions made in the water intakestudy report and Project Report, or the accuracy, completenessor reliablility of information contained therein, and shal incur noliability under any law, statute, rules or regualtions as to theaccuracy, reliability or completeness of such water intake studyreport and Project Report, even if any loss or damage is causedto the Selected Bidder by any act or omission on their part. TheMinistry of Power and the State Government of Madhya Pradeshhave 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 satisfyitself with respect to all the required information, inputs, conditionsand cirumstances and factors that may have any effect on his AB

C

D

E

F

G

H

Bid. In assessing the Bid, it is deemed that the Bidder has inspectedand examined the site conditions and its surroundings, examinedthe laws and regulations in force in India, the transportation facilitiesavailable in India, the grid conditions, the conditions of roads,bridges, ports, etc. For unloading and/or transporting heavy piecesof material and has based its design, equipment size and fixed itsprice taking into account all such relevant conditions and also therisks, contingencies and other circumstances which mayh influenceor affect the supply of power.

A

B

2.7.2.2 In their own interest, the Bidders are requested tofamiliarize themselves with the Electricity Act, 2003, the IncomeTax Act 1961, the Companies Act, 1956, the Customs Act, theForeign Exchange Management Act, IEGC, the regulationsframed by regulatory commissions and all other related acts, laws,rules and regulations prevalent in India. The procuers shall notentertain any request for clarifications from the Bidders regardingthe same. Non-awareness of these laws or such information shallnot be a reason for the Bidder to request for extension of the BidDeadline. The Bidder undertakes and agrees that beforesubmission of its Bid all such factors, as generally brought outabove, have been fully investigated and considered while submittingthe Bid.

C

D

E

ANNEXURE 5

SITE DETAILS ALONG WITH SITE MAP

The Site is located near Sasan village in Singrauli Tehsil in DistrictSidhi of Madhya Pradesh. The nearest Railway Station is ShaktiNagar (18km) and nearest Airport is Varanasi (250 km). The siteis situated at 23°58’30"N latitude and 82°37’03"E longtitue.

F

About 3500 acres of land has been identified for the projectcovering villages of Sidhikala, Harhawa, Tiara, Jhanjitola andSidhikhud. Out of this, about 2000 acres of land has been identifiedGfor main plant, about 1100 acres for ash disposal/dyke and 400acres for colony.

Water source for the project is Govind Ballabh Pant Sagar (RihandReservoir), which is about 6-7 km from the main plant site. Waterwill be brought to site by suitable pumping arrangement andpipelines.

H

Coal blocks (mines) in Singrauli area with reserves of about 700-800 million tons will be allocated as Captive Coal Blocks (mines)for this Project. The Project will require the development of acoalmine with production of 18-20 million tons per annum (MTPA)Vicinity map of Site is enclosed.

Further details are provided in the Project Report.”

(9) We may, at this juncture, notice also that the Special PurposeVehicle which was put in place for carrying out the activities also,commissioned a study by WAPCOS (a public sector body of the CentralGovernment). It was tasked with the project to ascertain about theavailability of water inter alia. Water is an indispensable factor for thesuccessful 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 thelowest bidder was found to be not eligible, Reliance Power Limitedemerged as the lowest bidder. In keeping with the conditions, ReliancePower Limited acquired 100 per cent share holding of the first respondentand it was favoured with the Letter of Intent on 01.08.2007. It enteredinto a Power Purchase Agreement (hereinafter referred to as ‘PPA’)on 07.08.2007. In the second week of December, 2007, it would appearthat the first respondent which now stood transformed as a fully ownedcompany of the successful bidder Reliance Power Limited, commissioneda new Study by WAPCOS. WAPCOS submitted its report on 04.04.2008.We must at this juncture notice that ‘21.07.2007’ has been determinedas the cut off date, the relevance of which will be unfolded in the laterpart of the judgment.

(11) The PPA contemplated two phases. The first phase was theconstruction of the power plant. The second was the operation of thepower plant. The PPA was to be enforced for a period of 25 years.Therefore, we can safely characterise it as along term agreement topurchase power. Since this was a case of competitive bidding, leading tothe finding out of the lowest bidder, but faced with the regime underSection 63 of the Act which stood attracted, after the PPA was enteredinto, a petition was moved before the Commission for adopting the ratesas contemplated in the PPA. By order dated 17.10.2007, the Commissionafter considering the relevant matters, adopted the rates in accordancewith the PPA. It is, thereafter, that the present petition was moved by A

B

C

D

EF

G

H

Athe first respondent on 19.02.2013. It is relevant at this stage to set outcertain portions of the petition. The petition has been filed under Section79 of the Act read with the statutory framework governing procurementof power through competitive bidding and articles 13 and 17 of the PPAbetween the parties for compensation due to change in law ‘during theconstruction period’. After setting out the facts which we do not considerBrelevant to advert to, the following is noticed.

“5. It is submitted that the following Changes in Law have occurredduring the Construction Period of the Project which have causedthe Capital Cost of the Project to increase substantially:

Ca) Increase in Declared price of Land for the Project whichincludes the land for the Power Station, the Moher, Moher-AmlohriExtension and Chhatrasal captive coal blocks;

b) Increase in cost of implementation of the Resettlement andRehabilitation Plan (“R&R Plan”) for the Moher, Moher-AmlohriDExtension 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; Ee) Increase in cost of Water Intake system due to an incorrectassessment of conditions in the original report supplied to thebidders at the RFP stage;

f) Levy of excise duty on cement and steel used in the Project;andFg) Levy of Customs Duty on mining equipment imported for theProject.”

(12) Since, in this case, we are concerned only with two aspects,namely claims under clause(e) and clause(g) we deem it appropriateGonly to refer to the pleadings of the first respondent in regard to thesame.

Increase in cost of Water Intake System

“65. As per Clause 1.4(v) of RFP for Sasan UMPP, the Procurersthrough the Authorized Representative had to provide water intake H

study report. WAPCOS (a premier Government of India agency)was appointed to conduct the water intake study. WAPCOS, asthe expert agency identified the water intake pump house locationand the pipeline route from the intake pump house to the powerplant in its Report. This report was made available to all the biddersbefore bid submission so that the bidders could factor in the costof the water intake system in preparation of their financial bid i.e.,the tariff at which power would be supplied to the Procurers. Thetotal estimated cost for the construction of water intake systemfor the location and route indicated in the report by WAPCOSwas estimated to be approximately Rs.92 Crores. The WAPCOSReport along with the estimated cost are annexed herewith andmarked as Annexure P-24 (Colly).”

“66. After RPower acquired the Petitioner, WAPCOS wasappointed to confirm the technical feasibility as part of detailedengineering exercise. During this process, it was discovered thatthe water intake location as finalized by WAPCOS before thebidding was not an appropriate location and does not ensure reliablesupply of water to the power plant. It was also found that thewater intake at the original location indicated by WAPCOS in thepre-bid report would have resulted in shutdown of power plantfor a considerable period during the lean season.”

“67. Thereafter, WAPCOS conducted detailed bathymetric studiesand recommended a new location for water intake, which was 23km from the power plant as against 12.5 km initially indicated atthe time of bidding (original location). It was highlighted that newlocation would ensure reliable water supply to the power plant.Due to increase in distance, submergence area along the routeand construction time, there has been considerable increase inthe cost of the water intake system as detailed below. The reportof WAPCOS recommending the revised location is annexedherewith and marked as Annexure p-25.”

“68. The cost for the construction of water system for the newlocation is Rs. 244 Cr. Out of the aforesaid amount, a sum ofRs.185 Crores has already been incurred and balance of Rs.59Crores is to be spent. The estimated increase in cost of thewater intake system due to the change in location of the waterintake system is Rs.152 Crores. Since this increase is directly AB

CD

E

F

G

H

attributable to the error in the WAPCOS report provided to thebidders at the pre-bid stage, the Petitioner is required to becompensated for the same. The cost break up for the new/appropriate location which will ensure reliable water supply isannexed herewith and marked as Annexure P-26.”

A

“75. It is submitted that the UMPP Policy envisages domesticcoal based UMPPs as integrated projects where the power stationand the captive coal mines are treated as an integrated unit. Thisis also recognized in the PPA as well as other project documentslike the RFQ and the RFP.”

B

“76.As per Notification 21 of 2002-Customs dated 01.03.2002issued by the Ministry of Finance, Government of India, thecustoms duty on goods required for setting up mega power projectshas been prescribed as nil meaning thereby that no customs dutywill be levied on goods imported for setting up a mega powerproject. A copy of Notification 21 of 2002-Customs is annexedherewith and marked as Annexure P-32.”

C

D

“77.Sasan UMPP was accorded in-principle mega power projectstatus as per Ministry of Power’s letter no. F.No. 12/18/2006-P&P dated 20.10.2006. The final certificate was issued on21.09.2007.”

E

“78.Sasan UMPP is an integrated power project with captive coalmines viz. Moher, Moher Amlohri Extension and Chhatrasal CoalBlocks. The captive coal mines allocated for Sasan UMPP forman integral and essential part of the Project and any equipmentimported in relation to the captive coal mines would therefore beFtreated as goods imported for setting up the Project.”

“79.The Petitioner was required to import mining equipment forsetting up the captive coal mines from which coal will be sourcedfor the Project since the required mining equipments were notavailable in India.”

G

“80.On 05.05.2011, the Petitioner applied to the EnergyDepartment, Government of Madhya Pradesh forrecommendation letter to import mining equipments for SasanUMPP under nil custom duty as is applicable for the otherequipment such as power plants of the Project. This application H

was premised on Notification 21 of 2002-Customs. However, videan Office Memorandum dated 17.06.2011, the Ministry of Powerhas intimated that the exemption for customs duty for UMPPs isgiven only with respect to power equipment, which was forwardedto Petitioner by Government of Madhya Pradesh on 20.06.2011.Copies of letters dated 05.05.2011 and 17.06.2011 are annexedherewith and marked as Annexure P-33(Colly)”

“81.Based on Ministry of Power’s Office Memorandum’s, theEnergy Department, Government of Madhya Pradesh declinedto issue the recommendation letter which was required by thePetitioner to claim nil customs duty. In view of the refusal byEnergy Department, Government of Madhya Pradesh and in theinterest of the Project and power consumers, Petitioner had toseek recommendation letter from Energy Department, Governmentof Madhya Pradesh to import mining equipments at project importrate of 20.94%, which is now reduced to 16.85% with effectfrom 17.03.2012.”

“82.The decision of the Ministry of Power detailed in its officememorandum dated 17.06.2011 and refusal by EnergyDepartment, Goverment of Madhya Pradesh to providerecommendation letter to import mining equipments for SasanUMPP under nil custom duty amounts to a Change in Law underArticle 13.1 of the PPA and Petitioner is entitled to be compensatedfor the same.”

“83.The total amount of customs duty paid by the Petitioner onmining equipments imported for Sasan UMPP is Rs. 361.47 Crorestill date. The total custom duty for mining equipments is estimatedto be about Rs. 531 Crores. The details of the custom duty paidon mining equipments and estimated to be paid in future areannexed herewith in Annexure P-34 (Colly).”

“84.It is submitted that the Petitioner has already surpassed theindicative costs provided by the Procurers and in certain instancesas indicated hereinabove, the Petitioner will be required to paythe increased Capital Cost in the future. In this regard, the Petitioneris claiming the following reliefs:

(a) In relation to the Changes in Law where the additional CapitalCost has already been incurred, this Hon’ble Commission may AB

C

D

EF

G

H

A

B

C

D

E

F

G

H

direct the Procurers to compensate the Petitioner for such increasein Capital Cost; and (b) In relation to the Changes in Law for which the liability is yetto be incurred, the Petitioner is seeking a declaration from thisHon’ble Commission that the increased expenditure amounts toChange in Law. The actual payment will be claimed as and whenit falls due.”

“89.From the above discussions and facts, it is clear that:- (a) One of the objectives of the National Electricity Policy andthe Tariff Policy is to secure commercial viability of electricitysector while ensuring fair pricing and quality of supply.

(b) Power procurement under Section 63 of the Act is governedby the statutory framework comprising (i) Section 63 of the Act,(ii) Government of India’s Guidelines and (iii) standard documentsbeing RFP and PPA.

(c) In terms of Section 63 of the Act the successful bid must beselected consistent with the guiding principles under Section 61 ofthe Act meaning thereby that while adoption of tariff under Section63 of the Act, the principles as laid down under Section 61 need tobe complied.

(d) Power procurement pursuant to the statutory frameworkconstitutes a statutory contract in terms of the pre-approved andfinalized PPA governed by provisions of the Act as well as theGuidelines.

(e) The PPA envisages the adjustment of tariff by this Hon’bleCommission to restore/restitute the party adversely affected (thePetitioner in the present case).”

“90. It is also pertinent to note that under Section 79(1)(b) of theAct, this Hon’ble Commission has been given the power to regulatethe tariff of generating companies like the Petitioner which havea composite scheme for generation and sale of electricity in morethan one state.”

“91.The present Petition has been filed for compensation onaccount of Changes in Law which have impacted the CapitalCost of the Project as well as for compensation for costs incurred

in excess of the indicative costs provided by the Procurers, whichwere the basis for formulation of the financial bid of Rpower.”

“92.The Petitioner had approached the Procurers for an amicableresolution. However, all efforts made by the Petitioner to seek anamicable resolution to the unforeseen and undeserved commercialimplication with the Procurers have proved fruitless. In thisbackdrop, it has become imperative and necessary for thePetitioner to invoke jurisdiction of this Hon’ble Commission toissue appropriate orders as prayed for in the Petition.”

“93.It is submitted that the present Petition has been filed invoking:- (a) Section 79(1)b) of the Act under which this Hon’bleCommission has the power to regulate the tariff of the Petitioner.

(b) Section 79(1)(f) of the Act which gives this Hon’bleCommission the power to adjudicate upon disputes involving thePetitioner.

(c) Regulations 82, 92 and 113 of the Central Electricity RegulatoryCommission (Conduct of Business) Regulations, 1999.

(d) Article 13 of the PPA read with Article 17 and Paragraph 5.17of the Competitive Bidding Guidelines in terms of which thisHon’ble Commission has the power to adjudicate upon any disputethat arises claiming any change in or regarding determination ofthe tariff or any tariff related matters, or which partly or whollycould result in change in tariff.”

“104. As detailed in Paragraphs 75-83 above, Notification 21 of2002-Customs issued by the Ministry of Finance, Government ofIndia granted 100% exemption from Customs duty to goods requiredfor setting up mega power projects. The Petitioner was requiredto import equipment for operation of the coal mine which is anintegral part of the Project.”

“105. It is submitted that as per the said Notification, any entitywhich intended to claim the customs duty exemption was requiredto apply to the Sponsoring Authority for an exemption certificate.This was essential to claim the customs duty exemption. In thisregard, the Petitioner wrote to the Government of Madhya Pradeshto recommend the Petitioner’s case to the Commissioner ofCustoms on 5.5.2011 for nil custom duty on mining equipments.”

AB

C

D

EF

GH

A

B

C

D

E

F

G

H

“106.It is submitted that vide an Office Memorandum dated17.06.2011, the Ministry of Power intimated Government ofMadhya Pradesh that the exemption for customs duty for UMPPsis given only with respect to power equipment. The total amountof customs duty paid by the Petitioner on mining equipmentsimported for Sasan UMPP is Rs.361.47 Crores till date. Totalcustom duty for mining equipments is estimated to be about Rs.531 Crores.”

“107. It is submitted that the decision of the Ministry of Poweramounts to a Change in Law under Article 13.1 of the PPA andthe Petitioner is entitled to be compensated for the same. It isfurther submitted that the Petitioner not being allowed to importmining equipment under nil customs duty as is granted for theother equipment such as power plants of the Project qualifies asChange in Law under Article 13.1 of the PPA.”

“108. It is submitted that as per RFP for Sasan UMPP, theProcurers had to provide water intake study report. This studywas conducted by WAPCOS and the report was made availableto all the bidders before bid submission. The cost of the waterintake system as per the report was approximately Rs.92 Crores.This estimation was factored into the bid at the time of submissionof the financial bid.”

“109. It is submitted that after Rpower acquired the Petitioner,WAPCOS was tasked with confirming the technical feasibilityduring the detailed engineering exercise. During this process, itwas discovered that the water intake location as intimated in thepre-bid report was not appropriate. After, conducting anotherdetailed study, WAPCOS determined that a new location wouldbe suitable. The new location is 23 km from the power plant asagainst 12.5 km initially indicated at the time of bidding (originallocation).”

“110. It is submitted that due to the increase in distance,submergence area along the route and construction time therehas been considerable increase in cost of the water intake system.The cost for the construction of water system for the new locationis Rs. 244 Cr. The estimated increase in cost of the water intakesystem due to the change in location of the water intake system isRs.152 Crores.”

“111.It is submitted that the increase in cost of the water intakesystem is on account of the errors in the report provided by theProcurers and therefore, the Procurers are obligated forcompensating the Petitioner for the difference in cost. It is furthersubmitted that since the water pipeline corridor is part of the PowerStation Land and the water intake pipeline is an integral part ofthe Power Station, any change in the indicative cost of the waterintake system will be covered under Change in Law.”

“120.Section 79 of the Act, inter alia, empowers the Hon’bleCommission to:- (a) Regulate the tariff of generating companies other than thoseowned or controlled by the Central Government if such generatingcompanies entered into or otherwise have a composite schemefor generation and sale of electricity in more than one State; and (b) To adjudicate upon the disputes involving the distributioncompanies or transmission licensees with regard to the mattersconnected with regulation of tariff of generating companies.”

“128. It is submitted that the present case involves a situationwhere the compensatory mechanism under the PPA forcompensation for Change in Law has failed. It does not meet theobjective of restoring an affected party to the same economiccondition as if the change in law had not occurred. Therefore, thisis a fit case for this Hon’ble Commission to exercise its powersunder Section 79 and devise a mechanism to uphold the objectiveand purpose of Article 13 – to provide economic restitution.”

“129. It is further submitted that PPA envisages a scenario wherethis Hon’ble Commission can interfere with the issues relating tothe claim made by a party for any change and/or determination ofthe tariff or any matter relating to the tariff or claims made by anyparty which partly or wholly related to any change in the tariff ordetermination of any such claim which can result in change in thetariff. In this context, Articles 13 and 17 are noteworthy. WhileArticle 13 of the PPA envisages tariff adjustment in the event of“Change in Law”, Article 17 of the PPA provides for disputeresolution, by the Hon’ble Commission in case of claim made byany party for any change in or determination of tariff or any matterrelated to tariff or claims made by any party, which partly or wholly AB

C

D

E

F

G

H

Arelate to any change in the tariff or determination of any of suchclaims could result in change in tariff.”

“142.The Petitioner therefore most humbly and respectfully praysthat this Hon’ble Commission be pleased to adjudicate upon thepresent Petition to:- B

(a) Declare that the items set out in Paragraph 5 above as Changein Law during Construction Period and/or changes which has ledto an increase in the Capital Cost of the Project; (b) Restitute the Petitioner to the same economic condition as ifthe said Changes in Law had not occurred and devise a mechanismCby which the Petitioner is compensated for the aggregate financialimpact and increase in capital cost of account of the Changes inLaw, the details of which are set out in Paragraph 113 above; and

(c) Pass any such other and further reliefs as this Hon’bleCommission deems just and proper in the nature and circumstancesDof the present case.”

(13) After exchange of pleadings, the Commission passed theorder dated 04.02.2015. Since we are in these appeals to be detainedonly by two aspects, we notice the following findings:

“30. The petitioner has submitted that as per Clause 1.4(V) ofERFP for Sasan UMPP, the Procurers through the AuthorizedRepresentative had to provide water intake study report. WAPCOS(a premier Government of India agency) was appointed to conductthe water intake study. WAPCOS, as the expert agency identifiedthe water intake pump house location and the pipeline route fromFthe intake pump house to the power plant in its Report. This reportwas made available to all the bidders before bid submission sothat the bidders could factor in the cost of the water intake systemin preparation of their financial bid i.e. the tariff at which powerwould be supplied to the Procurers. The total estimated cost forthe construction of water intake system for the location and routeGindicated in the report by WAPCOS was estimated to beapproximately 92 Crore. After RPower acquired the project,WAPCOS was appointed to confirm the technical feasibility aspart of detailed engineering exercise. During this process, it wasdiscovered that the water intake location as finalized by WAPCOSHbefore the bidding was not an appropriate location and does not ensure reliable supply of water to the power plant. It was alsofound that the water intake at the original location indicated byWAPCOS in the pre-bid report would have resulted in shutdownof power plant for a considerable period during the lean season.Thereafter, WAPCOS conducted detailed bathymetric studies andrecommended a new location for water intake, which was 23 kmfrom the power plant as against 12.5 km initially indicated at thetime of bidding (original location). It was highlighted that newlocation would ensure reliable water supply to the power plant.Due to increase in distance, submergence area along the routeand construction time, there has been considerable increase incost of the water intake system as per following details (AnnexureP-26 of the petition) and as per the earlier report of WAPCOS:-

31. MPPMCL has submitted that it is an expense incurred by thepetitioner but is not covered under “Change in Law” under Article 13.1.1of the PPA. However, it is concluded that the cost has been incurred bythe petitioner and exceeds the estimates given by the procurer’s authorizedrepresentative prior to bid submission. HPCC has submitted that theprice and other details given in the bidding document were by way ofinformation and it was for the bidders to conduct independent enquiryand verify the information and details. There is no misrepresentation bythe procurers or by the Bid Process Coordinators at the time of biddingin relation to water intake for the project. In view of the specificdisclaimer and the requirement to conduct independent enquiry, thepetitioner was required to make appropriate enquiries into the matterbefore bidding and the bidders were not entitled to proceed only on thebasis indicative information given by the Bid Process Coordinator.

A

B

C

D

E

F

G

H

A

B

C

D

E

F

G

H

32. We have considered the submission of the petitioner andrespondent. As against the indicative cost of 92.40 crore, thecost for the construction of water system for the new location is 244 crore out of the aforesaid amount, a sum of 185 crorehas already been incurred and balance of 59 crore is to bespent. The estimated increase in cost of the water intake systemdue to the change in location of the water intake system is 152crore. The petitioner has submitted that since this increase isdirectly attributable to the error in the WAPCOS report providedto the bidders at the pre-bid stage, the petitioner is required to becompensated for the same.

33. In our view, the claim is not covered under any of the provisionsof Article 13.1.1 of the PPA. The petitioner being aware that thecost of water intake system being indicative in nature and beingnot covered under the “Change in Law” under Article 13 shouldhave informed itself fully with the actual site conditions beforepreparing the bid and accordingly factored the possible estimatesof water intake system while quoting the bid instead of relying onthe indicative cost. In this connection, para 2.7.2.1 of the RfPdocument provides as under:

“2.7.2.1 The Bidder shall make independent enquiry and satisfyitself with respect to all the required information, inputs,conditions and circumstances and factors that may have anyeffect on his Bid. In assessing the Bid, it is deemed that theBidder has inspected and examined the site conditions of roads,bridges, ports etc. for unloading and/or transporting heavy piecesof material and has based its design, equipment size and fixedits price taking into account all such relevant conditions andalso the risks, contingencies and other circumstances whichmay influence or affect supply of power.”

Further para 4 of the RfP document provides that the pricing andother details given in the bidding documents are by way ofinformation only and it was for the bidders to conduct independentenquiry and verify the details and information. Para 4 are extractedas under:

“4. While the RFP has been prepared in good faith, neither theProcurers, Authorised Representative and Power FinanceCorporation (PFC) nor their directors or employees or advisors/

consultants make any representation or warranty, express orimplied, or accept any responsibility or liability, whatsoever, inrespect of any statements or omission herein, or the accuracy,completeness or reliability of information contained herein, andshall incur no liability under any law, statute, rules or regulationsas to the accuracy, reliability or completeness of this RFP, evenif any loss or damage is caused to the Bidder by any act oromission on their part.”

Therefore, it is the responsibility of the petitioner to verify thesuitability of the location of water intake and ensure reliable watersupply for the power plant and workout the relevant approximatecost of water intake system independently and factor in theestimates in the bid so that a realistic cost is reflected in the bid.The petitioner having failed to do so, the increase in cost on accountof this head is not admissible.”

(14) As far as the question relating to imposition of customs dutyon mining equipment is concerned, the same is dealt with in paragraphs40 and 41.

“40. We have considered the submission of the petitioner andrespondents. The Notification No.49/2006 provides as under:

Notification No. 49/2006-Customs

In exercise of the powers conferred by sub-section (1) of Section25 of the Customs Act, 1962 (52 of 1962), the Central Government,on being satisfied that it is necessary in the public interest so todo, hereby makes the following further amendments in thenotification of the Government of India in the Ministry of Finance(Department of Revenue) No. 21/2002- Customs, dated the 1stMarch, 2002, which was published in the Gazette of India,Extraordinary vide number G.S.R. 118(E), dated the 1st March,2002, namely:- 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, socertified by an officer not below the rank of a Joint Secretary ABC

D

E

F

G

H

to the Government of India in the Ministry of Power, that is tosay- A

(a) an inter-state thermal power plant of a capacity of 700MWor more, located in the States of Jammu and Kashmir, Sikkim,Arunachal Pradesh, Assam, Meghalaya, Manipur, Mizoram,Nagaland and Tripura; or B

(b) an inter-state thermal power plant of a capacity of 1000MWor more, located in States other than those specified in clause(a) above; or

(c) an inter-state hydel power plant of a capacity of 350MWor more, located in the States of Jammu and Kashmir, Sikkim,Arunachal Pradesh, Assam, Meghalaya, Manipur, Mizoram,Nagaland and Tripura; or C

(d) an inter-state hydel power plant of a capacity of 500MWor more, located in States other than those specified in clause(c) above”; D

(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, toprivatize distribution in all cities, in that State, each of whichhas a population of more than one million, within a period to befixed by the Ministry of Power.”.

E

[F.No.354/104/2003-TRU]

It is noticed that the revised policy guidelines issued by Governmentof India, Ministry of Power vide its letter No. A-118/2003-IPCdated 2.8.2006 has stated that an inter-State thermal power plantFof a capacity of 1000 MW or more is eligible for grant of megapower status. It further states as under:

“Zero Customs Duty: In terms of the notification of theGovernment of India in the Ministry of Finance (Departmentof Revenue) No. 21/2002-Customs dated 1.3.2002 readtogether with No. 49/2006-Customs dated 26.5.2006, the importof capital equipment would be free of customs duty for theseprojects.”

G

41. It is to be considered whether under the notification as statedabove, mining equipments were exempted from customs duty.General Exemption No.122 under the Customs Notification No.21/

H

2002 as amended from time to time contains the list of items whichare exempted from customs duty. It is observed that Notification21 of 2002-Customs clearly demarcates the power projects andmining projects separately. It is seen that at Ser No.399 of the list,coal mining projects are liable to pay customs duty. Ser No. 400only exempts the mega power project from payment of customsduty and there is no mention that it includes captive power plants.Therefore, it cannot be said that as on the cut-off date, there wasexemption on mining equipment and the petitioner had taken intoconsideration such exemption while quoting the bids. Nothing hasbeen produced in the petition which could indicate that any suchimpression was given by the procurers or their representative priorto bidding. In view of the foregoing discussion, the submission ofthe petitioner that the decision of the Ministry of Power detailedin its office memorandum dated 17.06.2011 and refusal by EnergyDepartment, Government of Madhya Pradesh to providerecommendation letter to import mining equipments for SasanUMPP under nil custom duty amounts to a “Change in Law”under Article 13.1 of the PPA and the petitioner is entitled to becompensated for the same is not acceptable and hence nocompensation would be available in this regard.”

THE APPEAL BEFORE THE TRIBUNAL

(15) This led to the appeal being filed by the first respondent underSection 111 of the Act. It is apposite that we set out the exact casewhich has been set up by the first respondent before the Tribunal.

“9.5 The Report identified the water intake pump house locationand pipeline route from the intake pump house to the power plantin its report. This report was made available to all the biddersbefore bid submission so that the bidders could factor in the costof water intake system in preparation of their financial bids i.e.,the tariff at which power be supplied to the Procurers. The totalcost for the construction of water intake system for the locationand route of indicated in the report by WAPCOS was estimatedto be Rs.92 Crores. The water intake system is an integral part ofthe Project without with it is not possible to set up and operate theProject. The WAPCOS report along with estimated cost areannexed herewith and marked as Annexure A-14.

9.6 After RPower was declared the successful bidder and theAppellant Company was transferred to RPower, WAPCOS was AB

C

D

E

F

G

H

Are-appointed to confirm the technical feasibility as part of thedetailed engineering exercise. During this process, it emerged thatthe water intake location as finalized by WAPCOS vide its earlierreport prepared for PFC/ Procurers and made available to allbidders prior to bid submission was not an appropriate locationand does not ensure reliable supply of water to the power plant. ItBalso emerged that the water intake at the original location indicatedby WAPCOS in the pre-bid report would have resulted inshutdown of the power plant for a considerable period in a yearduring the lean season. Therefore, WAPCOS recommended anew location for water intake, which was 23 km from the powerCplant as against the 12.5 kms initially indicated at the time of bidding(original location). It was highlighted that the new location wouldensure reliable water supply to the power plant. Due to increasein the distance, submergence area along the route and constructiontime, there has been considerable increase in the cost of waterintake system due to change in location as detailed below. TheDreport of WAPCOS recommending the revised location is annexedherewith and marked as Annexure A-15.

9.7 It is submitted that due to the change in location, cost forwater intake system has increased on following counts:

(a) While the route length itself increased to 23 kms, the increaseEin piping length increased from 24 km (2 Pipe Lines each of 12Kms) to 59.5 km (2 Pipe Lines each of 8 km & 3 Pipes each of14.5 km)

(b) Increased cost due to deeper Pump House.

(c) Additional dredging for creation of intake channel for theFoffshore pump house.

(d) Additional cost due to HT transmission line.

There has been considerable increase of approximately Rs.176Crores in cost of the water intake system, which now is estimatedto be approximately Rs.268 Crores. The cost break-up for theGnew location for the water intake system is annexed herewithand marked as Annexure A-16.

9.8 It is submitted that the increase in cost of the water intakesystem is on account of the errors in the report provided by theProcurers and therefore, the Procurers are required to compensateHthe Appellant for the difference in cost.

9.9 It is further submitted that since the water pipeline corridor ispart of the Land for the Power Station and the water intake pipelineis an integral part of the Power Station, any change in the indicativecost of the water intake system is covered under Change in Lawin terms of Article 13 of the PPA since it amounts to change incost of land of the Project. In fact, the Ld. General Commissionhas noted in the impugned Order that the estimate for DeclaredPrice of Land for the Power Station includes the Water IntakeSystem. The operative part of the Impugned Order is reproducedbelow:

“19. Change in the declared price of land is covered under “Changein Law”. The procurers have also agreed that this item ofexpenditure is admissible under “Change in Law”. The declaredprice of land for the Power Station was stated to be 190.677crore. This has been verified from the communication dated23.10.2006 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 wereprepared and made available by Authorized Representative(Power Finance Corporation) to all bidders. The disclaimer, if atall applicable, will only apply to such instances where the bidderswere able to identify any issues or liability with reasonablediligence. Based on the information and material provided, therewas no indication that the water intake system proposed in theWAPCOS Report was unfeasible. Therefore, the disclaimer doesnot absolve the Procurers of their liability to compensate theAppellant for the increase in cost. It is submitted that due to theerror in WAPCOS’s report, the Appellant is faced with an additionalburden of Rs.176 Crore which has adversely impacted the projecteconomics. It is submitted that the disclaimers contained in Para2.7.2.1 and Para 4 of the RFQ ought not to be considered absolutein nature so as to prevent loading of costs which are incurred bythe Appellant as a direct result of omission or error on part of theProcurers in providing information during the pre-bid stage. Thisapproach is counter-intuitive to ensuring that the Appellants Projectis able to supply cheap and affordable power to over 42 millionconsumers in the Procurer States. It is further submitted that thedisclaimers cannot act as an absolute bar to the liability of the AB

C

D

E

F

G

H

AProcurers. Any duty to independently verify inputs, informationfactors etc. require only a reasonable duty of care. The gravetechnical deficiencies and huge differences between actual costand estimates provided to the bidders defeat the fundamentalobjective of providing information to the bidders especially whenthe nature of expense in this case was of buying a report from aBGovernment Company which had carried out a detailed study.The Appellant had no other option but to rely on the informationprovided by the authorized representative of the Procurers.Therefore, Ld. Commission’s reliance on the disclaimers containedin the bid documents to reject the claim of the Appellant is notCsustainable.”(16) In regard to the complaint about the notification issued by theJoint Secretary in the Ministry of Power having brought about a changein law, we find the following complaint, inter alia:

“9.20. It is submitted that as per Notification 21 of 2022- CustomsDdated 01.03.2002 issued by the Ministry of Finance, Governmentof India, the customs duty on goods required for setting up megaprojects has been prescribed as nil meaning thereby that no customsduty will be levied on goods imported for setting up a mega powerproject. Notification 21/2022- Customs which provides as under:

“E

F

G

9.22 It is submitted that captive Coal Blocks being an integral partof the Project, the mining equipment would be covered under thisprovision as well. It is submitted that RFP clearly stated thatProcurers through the Appellant (which was a wholly-owned H

subsidiary of PFC at that time) will procure a certificate from theMinistry of Power that the benefits of the Mega Power Policywould be extended to the Project till scheduled CommercialOperations Date of the Power Station. As per definition, Projectincludes captive mine and hence, it was Procurer’s obligation toprovide 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 coalmines.

9.35 It is submitted that the Appellant has set up an ultra-megapower project which comprises of captive coal mines. It is notseparately indulging in mining activities. Moreover, the coal fromthe Project is being used only for the Project. The entire capitalcost of the power project includes the cost of the coal mines. Thisis also evident from Article 13 of the PPA where increase in costof land and R&R expenditure for the coal mines is included aschange in law. Therefore, the finding that the captive coal minesare a separate activity and will fall under Serial No. 399 is incorrectand ought to be set aside.

FINDINGS OF THE TRIBUNAL

(17) As far as the complaint about the increased costs on accountof change in water intake system, the following is the finding of theTribunal.

“12.4 After due consideration of the rival contentions of both theparties, what emerges is that after being declared as the successfulbidder, the SPL with a view to affirm the technical suitability ofthe preliminary report of the WAPCOS on Water Intake System,re-engaged the same agency for finalization of the said report. Itis not in dispute that the Consultant, WAPCOS reviewed its earlierreport and came to a conclusion that the earlier location of WaterIntake was not at proper place and would result in non-availabilityof water for the plant during lean period. It is relevant to note thatbased on the recommendations of WAPCOS, SPL decided to goahead for selection of new location as recommended and gotcarried out the requisite design and engineering of the entire Water AB

C

D

E

F

G

H

A

B

C

D

E

F

G

H

SUPREME COURT REPORTS

Intake System which resulted into longer piping system, increasedsubmergence area along the route, additional construction periodetc.. On account of these factors, the cost of Water Intake Systemwent up by over Rs.176 crores. The learned counsel appearingfor the Appellant pointed out that the judgment of this Tribunal inNabha Power case is not applicable to the present case since nocost relating to seismic zone data was provided to Nabha whereasin the instant case, costs were provided to the bidders. TheAppellant has further reiterated that para 2.7.2.1 and para 4 ofRFP which were relied upon by the Respondent procurers cannotbe taken as obsolute in nature so as to absolve procurers of theirresponsibility for providing grossly incorrect information leadingto substantial increase in cost of Water Intake System.

12.5 After thoughtful consideration of the submissions made bythe learned counsel for the Appellant and the Respondents andthe findings of the Central Commission, we find that while theresponsibility of carrying out due diligence before bidding andverifying the correctness of information provided in the biddocuments rested with the bidders, at the same time, Respondentprocurers cannot justify providing grossly erroneous report onWater Intake System taking shelter under the disclaimer in thebid document. As a matter of fact, the water availability for athermal power station of this magnitude on regular, reliable anduninterrupted basis is essential and is a vital input for successfuloperation of the plant. It is noticed that the report of WAPCOSsupplied to bidders at the time of bidding was deficient in ensuringadequate water supplies throughout the year uninterrupted and ifthe same would have been taken for construction andimplementation, the same could have resulted into huge loss tothe Respondent procurers being deprived of power supply forsome period of the year due to less/ non-availability of water duringthe lean period. It is not in dispute that Sasan UMPP is supplyingpower to the Respondent procurer at one of the most competitivetariff in the country. It is noted from the contentions of theRespondent procurers that such an issue has not been dealt witheither in the PPA or in the competitive bidding guidelines issuedby Ministry of Power under Section 63 of the Act, however, inview of the criticality of such situation, we opine that the matterneeds afresh re-look for suitable redressal. While the Central

Commission has correctly concluded that it does not qualify aschange in law under Articles 13.1.1 of the PPA, it, however, needsto be addressed on the basis of settled principles of law and equityalso, in the light of the Hon’ble Supreme Court findings in itsjudgment at Para 19 in Energy Watchdog vs. CERC dated11.04.2017. Thus, we are of the considered view that this issueinvolving substantial additional expenditure basically arising out oferroneous report of the consultants needs to be re-examined afreshby the Central Commission. Hence, this issue is answered in favourof the Appellant.”

(18) In regard to the complaint relating to the O.M. dated17.06.2011 forming change in law, we note the following findings:

“14.5 We have considered the submissions of the learned counselfor the Appellant and learned counsel for the Respondents alongwith the consideration of the Central Commission on this issuepertaining to the claims of the Appellant regarding compensationon account of additional payment towards custom duty on miningequipment. After careful consideration and critical evaluation ofthe same, the key question arises for consideration, whether theequipment required for captive coal mines allocated to UMPPshould be considered at par with the equipment required for settingup the power plants as far as exemption from the custom duty isconcerned. The contention of the Appellant that the captive coalmines allocated to Sasan UMPP are integral & essential part ofthe project as a whole and as such, the exemption of custom dutywas applicable to all equipments being imported for the entireproject i.e. captive coal mines as well as power plants. It is not indispute that the captive coal mines were allotted for UMPP for itsexclusive use for power generation and in no way, meant forcommercial utilization elsewhere.

14.6 In this regard, we also take the note of Hon’ble SupremeCourt directions in judgment dated 24.08.2014 in Manohar LalSharma Vs. Principal Secy., in W.P.(CRL) 120 of 2012 (Para158) that coal from captive coal mines is to be used for UMPPalone and no diversion of coal for commercial exploitation wouldbe permitted. Keeping these facts in view, we notice the glowingdifference between an independent coal mines up for exploitationand selling coal on commercial lines and a captive coal mine set AB

C

D

EF

GH

AB

C

D

EF

GH

Aup to meet requirement of UMPP only to generate power for theultimate benefit of the Respondent procurers and in turn, consumersfor obtaining electricity at cheaper rates. The actual positionspurported the assumption made by the Appellant that the customsduty exemptions will be available for import of the equipment forthe entire project including captive mines and power plants. WeBfind force in the argument of the learned counsel for the Appellantthat being the integral and inseparable part of the UMPP, thecustom duty rates applicable for stand alone coal mining projectswould not be applicable in the present case and the exemptionwould need to be given effect to. We, thus opine that the CentralCCommission appears to have been mechanically guided by themere description of the relevant entry (Sl.No.399 & 400) in thesaid custom duty notifications and has not appreciated that thecaptive coal mines being integral part of the UMPP cannot beequated to a stand alone coal mines, having commercial line ofutilization. The Appellant was thus right in assuming that CustomDDuty exemption will be available for the coal mining equipments.As such, this issue needs to be examined afresh in accordancewith law and various provisions of the RFQ/RFP/PPA. Therefore,we answer this issue in favour of the Appellant.”

(19) On the basis of the aforesaid findings, the Tribunal remandedEthe matter back to the Commission. We may also notice the sequel tothe impugned judgment. Pursuant to the remand, the Commissionreconsidered the matter in regard to the water intake. The Commissionordered payment of sum of Rs.176 crores. As far as the claim forcompensation on the basis that the issuance of the office memorandumFby the Joint Secretary in the Ministry of Power having brought about achange in law, it was found that the goods in question had been importednot by the first respondent but by its parent company. This, in turn, hastriggered two sets of appeals again before the Tribunal and they are stillpending. Their fate, undoubtedly, will depend upon the decision whichwe will be rendering in these cases.G

(20) We have heard Mr. P. Chidambaram, Mr. Dhruv Mehta, Mr.Rana Mukherjee, Mr. M. G. Ramachandran, Mr. G. Umapathy, learnedsenior counsel, assisted by Mr. Nikunj Dayal and Ms. Pallavi Sehgal.We have also heard Mr. Shubham Arya, learned counsel appearing onbehalf of the appellant in one of the appeals. On the other hand, we also H

heard Mr. Sajjan Poovayya, learned senior counsel assisted by Mr. RahulKinra, learned counsel and Mr. Amit Kapoor, learned counsel.

SUBMISSION OF APPELLANTS

(21) Shri P. Chidambaram, learned senior counsel appearing forthe appellant, would submit that the Tribunal has clearly acted in errorand illegally in passing the impugned order.

(22) He would submit that as far as the finding given by the Tribunalin regard to the water intake system being located at a different place, isconcerned, the Tribunal agreed with the Commission that there was nochange in law. Once, it was found that there was no change in law, thereis no power with the Tribunal to do what it did. The PPA signifies anagreement between the parties. The PPA goes into meticulous details.It follows an internationally competitive bidding and the obligations ofthe parties have been carved out and articulated with great care. Oncethe party, viz., the first respondent went to the Commission complainingthat there is a change in law and it was found that there is no change inlaw, there ended the jurisdiction of the Tribunal. Instead of terminatingthe lis, the Tribunal has clearly strayed outside its jurisdiction in grantingrelief on the basis that report of WAPCOS was grossly erroneous. Inthis regard, he enlisted in support of his contention, various clauses whichunambiguously disclaimed any liability with the procurers on account ofany inaccuracies which may be reflected in the WAPCOS report. Areport submitted by WAPCOS which is a public sector body was onlyby way of providing information. The bidders were provided with thereport well before they decided to put in their bids. Having regard to thevarious disclaimer clauses, it did not lie in their mouth to thereafter seekto 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 tosatisfy itself by conducting a study of the site. Nothing prevented thefirst respondent from carrying out inspection of the site and verifying foritself the information which was provided through the report of theWAPCOS.

(23) Mr. P. Chidambaram, learned senior counsel, further pointedout that a perusal of the second WAPCOS report, which is the sole basisfor the huge claim raised by the first respondent, would show that thesecond report does not, in any manner, rubbish the first report. It is not indispute, it is pointed out, that the procurers were in no way associated A

B

C

D

EF

G

H

Awith the carrying out of the second WAPCOS report. Unilaterally, thefirst respondent without any basis gets the second report commissionedand it is on the said basis alone that the claim was made and what ismore, allowed by the Tribunal. This is clearly impermissible. As regardsthe claim for compensation alleging change in law brought about by theOffice Memorandum issued by the Joint Secretary is concerned, in theBfirst place, it is pointed out that the proper thing for the first respondentto do would have been to take up the matter with the Department andclaim a refund and he would submit it is strange instead of doing that theburden is sought to be passed on to the procurers and which, in turn,would necessarily be passed on to the ultimate consumers.C

(24) Further, it is pointed out that the Tribunal has actuallyproceeded to take into consideration the earlier notifications whichprevailed at the time of the cut off date with reference to which alonechange in law is projected. Thereafter, it has come to the conclusion thatfor the goods imported from abroad for the purpose of the captive mines,Dthere was an exemption. Such an inquiry itself could not have beendone. In other words, it is not a case where the first respondent hadindisputable material on hand which established unambiguously that therewas a change in law. This is for the reason that there is no material toestablish that prior to the cut off date, the goods which are the subjectmatter of dispute, were exempt under the notification. On the other hand,Eour attention is drawn to the decision of the Advance ruling authoritywhich has gone into the issue and found that goods in question were notexempt. In fact, it is the contention of the appellants that the officememorandum issued by the Joint Secretary, Ministry of Power, merelyfollows the advance ruling.F

(25) Another argument which is raised in this regard is that theJoint Secretary in the Ministry of Power is not the final Governmentalauthority within the meaning of clause 13.1.1. What we are concernedwith is notification issued under Section 25 of the Customs Act. It is notas if any authority which is competent within the meaning of ArticleG13.1.1 has issued a notification or even an interpretation within themeaning of the said article which has resulted in a change in law withinthe meaning of Article 13.1.1.

(26) We have also heard Shri Dhruv Mehta, as we have alreadystated. We have heard the other senior counsel who have essentiallyHadopted the arguments which have been addressed by Mr.

P.Chidambaram, learned senior counsel, and they are one in contendingthat the Tribunal has strayed outside the contours of its jurisdiction andthis has resulted in an order which is clearly illegal and erroneous.

SUBMISSIONS OF THE FIRST RESPONDENT

(27) Per contra, Mr. Sajjan Poovayya, learned senior counselfor the first respondent, took us through the other side of the picture andprojected a totally different scenario. He would point out, in the firstplace, that the Court may not view the PPA in question as an ordinarycontract. He pointed out that what is at stake is the interpretation to beplaced on a long term power procurement contract. It is not as if in sucha contract, the matters are fixed with reference to the point of timewhen the contract is entered into. It is not cast in stone, in other words.It is open to change. More appropriately, it is open to regulation. We areinvited to consider that the Act represents a paradigm shift from theprevious regime under which the price of power was fixed essentially atthe whims and caprice of the State Electricity Boards. There was astagnation in the production and supply of power. It is realising the needfor increasing private participation in the generation of power that theAct was enacted in the year 2003. Being the subject matter of regulationsmeans that tariff was open to be revisited from time to time. It is preciselythis regime which is reflected by Section 79 of the Act. It is furtherpointed out that the complaint of the appellants regarding the Tribunal inregard to the water intake system despite agreeing with the Commissionthat there was no change in law rendering the findings it did and therefore,being unsustainable, the Court may consider that in fact there was achange in law. This argument is sought to be buttressed with referenceto the provisions of clause (iii) of Article 13.1.1. It is contended, in otherwords, that a perusal of the various clauses of the PPA would show thatthe procurers (the appellants) were obliged under the contract to provideinitial consent. One of the initial consents related to the water linkage forthe project. He would submit that in view of the provisions of ScheduleII to the PPA the initial consent also consisted of carrying out the task ofmaking available land for the power plant and for the laying of the pipeline.Since as it turned out and as supported by the second report of theWAPCOS, there was clearly insufficient availability of water at the sitesupported by the first report, the first respondent was compelled to takewater from a distant point of the reservoir in question. This led to thecolossal increase in the expenditure towards laying of the pipeline interalia. This constituted, therefore, a change in law.

A

BC

D

EF

GH

A(28) As far as the contention based on the disclaimer clauseswhich are relied upon by the appellant is concerned, it is pointed out thatthe width of the disclaimer clause could not be stretched to the point thatis canvassed by the appellants. We are dealing with a case where apublic sector unit viz., WAPCOS has given its report. Not unnaturally,the first respondent relied upon the same. It is factored in its price andBonce it is found that the report was entirely fallacious, no shelter can besought by the appellants under the disclaimer clauses. Our attention wasdrawn to various judgments. They include Energy Watchdog v. CentralElectricity Regulatory Commission and Others (2017) 14 SCC 80,Uttar Haryana Bijli Vitran Nigam Ltd. &Anr. v. Adani Power LimitedC&Ors. (2019) 5 SCC 325, Gujarat Urja Vikas Nigam Ltd. v. EssarPower (2008) 4 SCC 755, Skandia Insurance Co. Ltd. v. KokilabenChandravan & 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 GasCommission of India (2010) 11 SCC 296, Nabha Power Limited v.DPSPCL (2018) 11 SCC 508.

(29) The respondents have also relied upon the judgments of thisCourt which are detailed hereinafter essentially for the proposition thatthere is power under Order XLI Rule 22 and Rule 33:Prahlad&Ors. v.State of Maharashtra &Anr. (2010) 10 SCC 458, State of PunjabE&Ors. v. Bakshish Singh (1998) 8 SCC 222, Mahant Dhangir & Anr.v. Madan Mohan &Ors. (1987) (Supp) SCC 528.

(30) It is contended by Mr. Sajjan Povayya, learned senior counselthat there is indeed power, at any rate, under the provisions of Section79(1)(b) of the Act to revisit the fixation of tariff de hors even theFspecific relief which is contemplated under the contract. In this regard,emphasis is laid on the fact that clauses 4.7 and 5.1.17 of the guidelinescame to be amended and it is the amended guidelines which apply to thefacts of the case. That it is the amended guidelines which were appliedcan be perceived from the fact that the amended guidelines are seenGreflected in the PPA. The amended provisions are found in 17.3.1 and13.1.1

(31) Amended Guideline 4.7 is reflected in 13.1.1 whereasamended guideline 5.17 is reflected in Article 17.3.1.

(32) With regard to 17.3.1, it is pointed out that a reading of theHsame, in particular, the opening limb of the provision would show that there is clearly general power for the purpose of changing determiningorincreasing the tariff. It is sought to be contrasted with specific instanceswhich would notify the jurisdiction of the Commission which includedArticle 13.1 which deals with change in law. In other words, the contentionis that de hors a change in law, it becomes the duty of the Commissionand the Tribunal and of this Court to factor in the need to arm the Tribunaland the Commission with ample power in the interest of justice, to dealwith situations which call out for a fair and equitable treatment to bemeted out to the private player as well in a long term contract.

(33) Mr. Amit Kapoor, learned counsel, who supplemented thesubmissions of Mr. Sajjan Poovayya, learned senior counsel, would drawour attention to Section 61 of the Act. He would submit that Section 61read with Sections 63 to 79(b) provided a statutory framework whichenabled the Commission to devise an equitable tariff even in a PPAgoverned scenario having regard to the very nature of the servicesinvolved and the changed system evolved under the Act.

(34) Mr. Amit Kapoor, learned counsel, laid stress on the principleof contra proferentem. He would point out along with Mr. Sajjan Poovyya,learned senior counsel, that the Court must not be oblivious of the factthat this case represents a case 2 scenario under the RFP. This meansthat unlike a situation where the contractor is free to choose the site andthe other facilities, in a case 2 situation which is the situation prevailingin this case,everything is dictated to by the employer viz., SPV. Expatiatingthe said point, it is pointed out that the bidders did not have a control overthe water source from which water had to be taken. In other words, thewater could not have been sourced from any other water body. Thisaspect is relevant for the purpose of considering the free play with theCommission in the matter of fixing tariff based on a situation which wascreated as are exemplified by two grounds which have been made outand which are the subject matter of the appeals. Another point which isprojected is that in regard to geological matters, the bidders were warnedthat they would have to on their own make an assessment. But such acaveat was not entered with regard to pertinently the hydrologicalconditions. Since water intake system related to hydrology, it is not opento the appellants to ward off a just fixation of tariff based on the discoveryof the fact that the first WAPCOS report was highly flawed. We arereminded that it was of the greatest importance for the first respondentthat it ran the power plant on a yearly basis. The second report of theWAPCOS would clearly indicate that if the appellant had to take water AB

C

D

EF

G

H

AB

C

D

EF

G

H

Ain terms of the first WAPCOS report, during the lean months, the firstrespondent would not get sufficient water supply to operate the plant. Ifsuch an eventuality had taken place, the result would be that the procurerswould end up paying the charges towards capacity charge even though,it would not get power. The appellants would be compelled to buy powerfrom outside and finally the end consumer would have to bear the bruntBof the loss. It is to avoid all this that the first respondent has acted in amanner which was not only in tune with its best interest but also ensuringthat the procurers and finally the consumers were best protected. It isfurther pointed out by the learned counsel that the Court must bear inmind that the contract in question permits the passing of the benefit notConly to the contractor but also to the employer viz., the appellants. Inother words, if it was a case where the first respondent were to befound to be making an unjust enrichment under the regulatory mechanism,the appellants could have moved the Commission for bringing down therates. Therefore, the regulatory mechanism is meant to work both ways,in both directions and the Court must bear in mind the unique nature of aDregulated contract.

(35) Shri Amit Kapoor also referred to the theory of incompletecontracts. This is explained as meaning that being a long term contact,the parties may not expect and factor in all possible developments whichmay take place. This also necessitates the Commission being endowedEwith sufficient power to reach the contractor as also the employer a justtariff bearing in mind the regime under Section 61 of the Act.

(36) Upon being queried as to what would be the position at lawoutside of the PPA and of the jurisdiction of the Commission and if thematter were to be considered with reference to the law of contract, ShriFAmit Kapoor drew our attention to Sections 18 and 19 of the IndianContract Act, 1872. He would point out that even an innocentrepresentation within the meaning of Section 18 can result in the contactbecoming voidable under Section 19. Section 19 contemplates that theparty whose consent is obtained by misrepresentation within the meaningGof Section 18 can insist upon the other side to perform the contact. Butthe wronged party retained the right to insist that it shall be put in thesame position it would have occupied if there was no misrepresentation.Therefore, it is pointed out that there is foundation even in the law ofcontract for contending that the Commission armed with its powers underSection 79(b) could compensate the contractor in the situation we areHconcerned with.

(37) The judgment of this Court reported in Uttar Pradesh PowerCorporation Limited v. National Thermal Power Corporation Limitedand Others (2009) 6 SCC 235 rendered by a Bench of three learnedjudges with Justice S. B. Sinha speaking for the Court had occasion toconsider the impact of regulations made purporting to act under theElectricity Regulatory Commission Act, 1998. In the said judgment, ithas been inter alia held that there is power under regulation 92, inparticular, to revise the tariff (see para 35 read with 38 and 40)

(38) Noticing this aspect, when we sought assistance from thelearned counsel. We heard the following submissions. Mr. M. G.Ramachandran, learned senior counsel, would point out that theobservations relating to the power under Section 92 must be understoodas confined to the situation obtaining under Section 61 read with Section62 of the Act. The said power may not be available when the tariff isfixed under Section 63 of the Act. When we queried as to whether theprovisions of Section 61 are totally unconnected with Section 63, Mr. M.G. Ramachandran, learned senior counsel, would submit that Section 61may not be entirely inapplicable. He would submit that particularprovisions of Section 61 may, in fact, apply. They include Section 61(b).He would submit that even the guidelines issued under Section 63 havetheir echo in Section 61 and, therefore, it cannot be said that Section 61and 63 are strange bedfellows.

(39) He would, however, contend that in no circumstances canthe power under regulation 92 of 1999 regulations apply when partieshave after competitive bidding and approval of the tariff under Section63 become bound by a long term contract under the PPA. In a casewhere there is a determination of tariff within the meaning of Section62, on the other hand, Regulations of 1999 may apply. He would furtherpoint out that the power under regulation 92 which provides for reviewingof tariff and which has been understood as power of revision of tariff asa whole must be subject to the rider that the revision of tariff can bedone only strictly in accordance with the tariff regulations brought in theyear 2001 and as subsequently, amended from time to time. In fact, hewould draw our attention to the Regulations of 2014 which expresslyexcludes tariff determination done under Section 63 of the Act from theambit of the said regulation. In this regard, Shri Sajjan Povayya, learnedsenior counsel, on the other hand, drew our attention to the judgment ofthis Court Gujarat Urja Vikas Nigam Limited v. Tarini Infrastructure ABC

D

E

F

G

H

ALimited and Others (2016) 8 SCC 743 2022 SCC Online SC 1615 2023SCC Online SC 233. He would on the strength of these judgments pointout that there is regulatory power available even in a case covered bySection 63 of the Act.

ANALYSISB

(40) We, in these cases, are concerned only with two issues. Aswe have noticed, the first respondent filed a petition before theCommission invoking its power inter alia under Section 79(b). The matterrelates expressly to the construction period. It is at this point apposite tonotice the relevant provisions under the PPA.

C

(41) Article 13 deals with change in law. Article 13.1.1. defineswhat a change in law is. It reads as follows:

“ARTICLE 13: CHANGE IN LAW

13.1 Definitions

D

In this Article 13, the following terms shall have the followingmeanings:

13.1.1 “Change in Law” means the occurrence of any ofthe following events after the date, which is seven(7) days priorto the Bid Deadline:

E

(i) the enactment, bringing into effect, adoption, promulgation,amendment, modification or repeal, of any Law or (ii) a changein the interpretation of any Law by a Competent Court of Law,tribunal or Indian Governmental Instrumentality provided suchCourt of Law, tribunal or Indian Governmental Instrumentality isfinal authority under law of such interpretation or (iii) change inany consents, approvals or licenses available or obtained for theProject, otherwise than for default of the Seller, which results inany change in any cost of or revenue from the business of sellingelectricity by the Seller to the Procurers under the terms of thisAgreement, or (iv) any change in the (a) Declared Price of Landfor the Project or (b) the cost of implementation of the resettlementand rehabilitation package of the land for the Project mentionedin RFP or (c) the cost of implementing Environmental ManagementPlan for the Power Station mentioned in the RFP or (d) the costof implementing compensatory afforestation for the Coal Mine,indicated under the RFP and the PPA; but shall not include (i) any F

G

H

change in any withholding tax on income or dividends distributedto the shareholders of the Seller, or (ii) change in respect of UICharges or frequency intervals by an Appropriate Commission.

Provided that if Government of India does not extend theincome tax holiday for power generation projects under Section80 IA of the Income Tax Act, upto the Scheduled CommercialOperation Date of the Power Station, such non-extension shall bedeemed to be a Change in Law.”

(42) Article 13.1.2 declares that the Supreme Court or High Courtor a Tribunal or in similar judicial or quasi judicial body in India that hasjurisdiction to adjudicate upon issues relating to the project will be treatedas competent Court.

(43) Article 13.2 provides for the actual application and theprinciples for computing the impact of change in law. It reads as follows:

“13.2 Application and Principles for computing impact of Changein Law.

While determining the consequence of Change in Law underthis Article 13, the Parties shall have due regard to the principlethat the purpose of compensating the Party affected by suchChange in Law, is to restore through Monthly Tariff Payments,to the extent contemplated in this Article 13, the affected Partyto the same economic position as if such Change in Law has notoccurred.

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 begoverned by the formula given below:

For every cumulative increase/decrease of each Rupees Fiftycrores (Rs.50 crores) in the Capital Cost over the term of thisAgreement, the increase/decrease in Non Escalable CapacityCharges shall be an amount equal to zero point two six seven(0.267%) of the Non Escalable Capacity Charges.

Provided that the Seller provides to the Procurers documentaryproof of such increase/decrease in Capital cost for establishingthe impact of such Change in Law. In case of Dispute, Article17 shall apply.

AB

C

D

E

F

G

H

It is clarified that the above mentioned compensation shall bepayable to either Party, only with effect from the date onwhich the total increase/decrease exceeds amount of Rs. Fifty(50)crores.

A

b) Operation Period

B

As a result of Change in Law, the compensation for anyincrease/decrease in revenues or cost to the Seller shall bedetermined and effect from such date, as decided by the CentralElectricity Regulatory Commission whose decision shall be finaland binding on both the Parties, subject to rights of appealprovided under applicable Law.

C

Provided that the above mentioned compensation shall bepayable only if and for increase/decrease in revenues or costto the seller is in excess of an amount equivalent to 1% ofLetter of Credit in aggregate for a Contact Year.

D(44) Article 13.4.2 provides for the manner in which the paymentfor changes in law is to be effected. It reads as follows:

“13.4.2 The payment for Changes in Law shall be throughSupplementary Bill as mentioned in Article 11.8. However, in caseof any change in Tariff by reason of Change in Law, as determinedEin accordance with this Agreement, the Monthly Invoice to beraised by the Seller after such change in Tariff shall appropriatelyreflect the changed Tariff.”

(45) We may notice the other foundational articles relied upon bythe first respondent. Article 17 relates to Governing law and DisputeFresolution. Article 17.2.1 reads as follows:

“17.2.1 Either Party is entitled to raise any claim, dispute ordifference of whatever nature arising under, out of or in connectionwith this Agreement including its existence or validity or termination(collectively “Dispute”) by giving a written notice to the otherParty, which shall contain:

G

(i) a description of the Dispute;

(ii) the grounds for such Dispute; and

(iii) all written material in support of its claim.”

H

(46) The further articles which we need not capture contemplatethat the claim may be met even with a counter claim and an attemptshould be made to settle the dispute amicably (see Article 17.2.3). Failureto arrive at a settlement opens the doors of Article 17.3. It is justifiableas the caption is ‘Dispute Resolution’.

(47) Article 17.3.1 is the crucial article. It reads: - “Where any Dispute arises from a claim made by any Party forany change in or determination of the Tariff or any matter relatedto Tariff or claims made by any Partywhich partly or whollyrelateto any change in the Tariff or determination of any of suchclaims could result in change in the Tariff or (ii) relates to anymatter agreed to be referred to the Appropriate Commission underArticles 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 AppropriateCommission. Appeal against the decisions of the AppropriateCommission shall be made only as per the provisions of theElectricity Act, 2003, as amended from time to time.

The obligations of the Procurers under this Agreement towardstheSeller shall not be affected in any manner by reason of inter-se disputes amongst the Procurers.”

(48) It is thereafter that as we have noticed, Article 17.3.2 appearswhich we are not setting out, deals with the settlement of disputes whichare outside the ambit of Article 17.3.1.

(49) We may at the very beginning notice the change that is broughtabout in the guideline. True it is that as we have noticed that the earlierguidelines which were formulated on 19.01.2005 contemplated a differentregime both as regards change in law and also dispute resolution. Thequestion would however be the extent to which the first respondent canderive 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 basedon 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 orobtained for the Project, otherwise than for default of the Seller,which results in any change in any cost of or revenue from the A

B

C

D

EF

G

H

Abusiness of selling electricity by the Seller to the Procurersundertheterms of this Agreement.”

(51) It is the case of the first respondent that since in the schedulethe initial consent which was, in fact, a deemed initial consent consistingof performing of the task of making available land for the power plantBand for the pipeline and there is a change in the same in view of whattranspired pursuant to the second report of the WAPCOS, the firstrespondent was entitled to relief. In regard to the said argument, wemust notice the following obstacles which are indisputable. We noticethat the pleadings which we have set out, position before the Commissionand what is more, even before the Tribunal, do not reveal that the firstCrespondent has taken such a stand. No express reference is found toSchedule 2 containing the alleged deemed initial consent being overriddenby the subsequent consent as a foundation for the claim based on changein law.

(52) The second obstacle which we must notice is that we areDdealing with an appeal under Section 125 which is based on the existenceof a substantial question of law. In this regard, indisputably both theCommission and the Tribunal have rendered the concurrent finding thatthe first respondent has failed to establish any change in law. Thus, thefirst respondent is up against concurrent findings which we cannot lightlyEdisregard.

(53) Thirdly, we may notice that the first respondent has notindependently challenged the finding rendered by the Tribunal holdingthat there is no change in law. We have noticed that the Tribunal hasproceeded to premise the grant of relief to the first respondent andFremanding the matter on a totally different basis. Here, we may noticeno doubt that treating it as a part of the power of appellate Court tocorrect errors in the findings in the impugned order passed may extendin appropriate cases by the principle of Order XLI Rule 22. However,objection is seen raised by the Appellants to permitting of the principle inOrder XLI Rule 22 CPC to govern in the situation such as in an appealGunder Section 125 of the Act. We proceed on the basis that there ispower to permit the respondent to impugn a finding given by the Tribunalagainst the respondent even without filing any appeal or cross petition.

(54) Examining the claim on merits, we find that the first respondentwould fail. It is categorically stated in para 68 of the petition that the H

increase in the cost is directly attributable to the error in the WAPCOSreport provided to the bidders at the pre-bid stage. It is contended thatthe first respondent is required to be compensated for the same.

(55) In para 108, it is stated that as per the RFP, the procurers hadto provide the water intake study report. As per the said report, the costof water intake system was approximately Rs.92 crores. It is furtherstated in para 110 that there was considerable increase in the cost ofwater due to the water intake system. It is stated that it is on account oferrors in the report. It is, however, no doubt, in para 111 stated that sincewater pipeline is part of the power station land and the water intakepipeline is an integral part of the power station, the indicative cost of thewater intake system will be covered by change in law. In the appealalso, we have noticed the stand elaborately.

(56) Initial consent, has been defined in the PPA as meaning theconsents 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 (otherthan those required for the Interconnection and TransmissionFacilities and the Initial Consents) required for developing,financing, constructing, operating and maintenance of the Projectand maintaining/renewing all such Consents in order to carry outits obligations under this Agreement in general and this Article 5in particular and shall supply to the Lead Procurer promptly withcopies of each application that it submits, and copy/ies of eachconsent/approval/license which it obtains. For the avoidance ofdoubt, it is clarified that the Seller shall also be responsible formaintaining/renewing the Initial Consents and for fulfilling allconditions specified therein.”

(57) It is true that the procurers were to secure certain initialconsents whereas the vast majority of the consents were to be procuredby the seller. Whatever was to be procured by the procurers apparentlyhas been described as initial consents. It is also not in dispute that thoughthe word consent is used in Article 13.1.1, the initial consent would alsoqualify as consent. The contention of the appellants is that as far as theinitial consent contemplated which was to be performed by the procurersit was to provide the water linkage. The water linkage consisted ofmaking available the source of water which consisted of the Govind AB

C

D

EFGH

ABallabh Pant Sagar (Rihand Reservoir). There has been no change inthe said consent. It is not a case of the first respondent, in other words,that the first respondent has been forced to take water from any otherwater source. In this regard by communication dated 23.10.2006, wefind the following:

B“6. Reference Clause: RFP 1.4(v) – regarding tying up waterlinkage for the Project requirement alongwith approval of CentralWater Commissioner

(i) This has already been provided on 12[th] October, 2006.

(ii) The water intake study report and Project Report includingCgeo-technical study, topographical survey, area drainage study,socio-economic study and EIA (rapid), were provided on 3[rd]August, 2006.”

(58) While on this document, we may also notice the following inregard to the declared price of land contemplated in the RFP underDclause 1.4 (ii):

“2. Reference Clause: RFP 1.4(ii) – regarding Declared Price ofLand for Power Station Indicative Declared Price of Land for Power Station is as follows:E(i) Power Plant Area – Rs.110 Crores

(ii) MGR Land – Rs.80 Crores.

(iii) Water Pipeline Corridor– Rs.0.63 Crores

(iv) Ash Pipeline Corridor – Rs.0.047 Crores”F(59) There is no dispute regarding this aspect. In this regard, wenotice that under Schedule 1A to the PPA it has been clearly indicatedthat water source in the project is Govind Ballabh Pant Sagar(RihandReservoir).

(60) It is, thereafter, we must notice that under the caption initialGconsent in Schedule 2, on behalf of the procurers, the SPV was expectedto issue the notification under Section 6 of the Land Acquisition Act,obtain necessarily environmental and forest clearance for the powerstations, allocate captive coal mines and finally, give the water linkagefor the reasonable project requirements. It is this water linkage for thereasonable project requirements which was contemplated to be fulfilledH

from the water source Govind Ballabh Pant Sagar(Rihand Reservoir).The communication dated 23.10.2006 would indicate that the CentralWater Commission had given its approval for sourcing the water needfrom the water body in question. In the said sense, the procurers hadfulfilled their obligation as contemplated in RFP.

(61) The RFP which preceded the PPA provided for certainconditions which we have already indicated. Clause 1.4 inter aliacontained undertaking for providing the water linkage for the projectwith the requisite approval of the Central Water Commission at least 30days prior to Bid deadline. In the PPA, it is indicated that the procurershave completed the initial studies as contained in the project report andobtained initial consent required for the project which are set out in PartI of Schedule 2 and have been made available to the seller on the date ofthe PPA except two matters: (1) Forest clearance and the declarationunder Section 6 of the Land Acquisition Act. It is in Part I Schedule 2 ofthe PPA stated that the notification under Section 6 of the LandAcquisition Act was an act to be performed by the procurers. It is thisact which was not done initially at the stage of the PPA. Also forestclearance is mentioned in the Part I of Schedule 2. Even the saidclearance was also apparently not obtained as is indicated at the beginningof the PPA. Thereafter, Part II of Schedule 2 contains the clause whichis the fountainhead of the argument based on initial consent.

(62) It contemplated performing of the task mentioned in Article3.1.2A also shall be part of the initial consent on their completion withinthe time provided. Article 3.1.2A contemplated performance of the taskwith which we are concerned viz., making available the land for thepower plant and for the water intake pipeline. This task was to beperformed within a period of eight months from the date of the letter ofintent being issued or six months from the PPA whichever is later. It istrue that the task which was to be performed by the procurers in termsof Article 3.1.2A was performed belatedly by the procurers. In otherwords, the time limit was overshot by nearly 18 months. But this delay isnot the basis for the claim based on change in law.

(63) The question would then arise as to whether the delay in theperformance of the task which has been characterised on its performancewithin the time as a deemed initial consent would lead to a change in lawwithin the meaning of Article 13.1.1. We find that Article 3.3.3 of thePPA reads as follows:

A

BC

D

E

F

G

H

A

B

C

D

E

F

G

H

“3.3.3 In case of inability of the Seller to fulfil the conditionsspecified in Article 3.1.2 due to any Force Majeure event, thetime period for fulfilment of the Condition Subsequent as mentionedin Article 3.1.2 and Article 3.1.2A, shall be extended for the periodof such Force Majeure event, subject to a maximum extensionperiod of ten (10) Months, continuous or non-continuous inaggregate. Thereafter, this Agreement may be terminated by eitherthe Procurers (jointly) or the Seller by giving a notice of at leastseven (7) days, in writing to the other Party.

Similarly, in case of inability of the Procurers to fulfil theconditions specified in Article 3.1.2A due to any Force Majeureevent, the time period for fulfillment of the Condition subsequentas mentioned in Article 3.1.2 and Article 3.1.2A, shall beextended period of ten (10) Months, continuous or non-continuous in aggregate. Thereafter, this Agreement may beterminated by either the Procurers (jointly) or the Seller bygiving a notice of at least seven (7) days, in writing to the otherParty.”

(64) We must next notice Article 3.3.3A which follows:

(64) We must next notice Article 3.3.3A which follows:

“3.3.3A In case of inability of the Procurers to perform the activitiesspecified in Article 3.1.2A within the time period specified therein,otherwise than for the reasons directly attributable to the Seller orForce Majeure event, the Condition Subsequent as mentioned inArticle 3.1.2 would be extended on a ‘day for day’ basis, equal tothe additional time which may be required by the Procurers tocomplete the activities mentioned in Article 3.1.2A, subject to amaximum additional time of six (6) Months. Thereafter, thisAgreement may be terminated by the Seller at its option, by givinga notice of at least seven (7) days, in writing to the Procurers. Ifthe Seller elects to terminate this Agreement, the Procurers shall,within a period of thirty days, purchase the entire shareholding inthe Seller for the following amount. Provided such purchase ofshares shall be undertaken by the Procurers in the ratio of theirthen existing Allocated Contracted Capacity:

a) total amount of purchase price paid by the Successful Bidderto the shareholders of the Seller acquire the equity shares ofthe Seller as per the RFP; plus

b) total amount of the Declared Price of Land and GeologicalReport (GR) to the extent already paid by the Seller after theacquisition of its 100% shareholding by the Selected Bidder;plus

c) an additional sum equal to ten percent (10%) of the sumtotal of the amounts mentioned in sub-clauses (a) and (b).

In addition, the Performance Guarantee of the Seller shall alsobe released forthwith.”

(65) A perusal of the aforesaid articles would reveal that the partieshave provided for the consequences of failure on the part of the procurersto make available land as contemplated in Article 3.1.2A. The long andshort of it is that if a certain timelimit is crossed by the procurers in theperformance of its obligations in this regard, the seller (the first respondent)has been given the right to repudiate the contract. What is more, it couldinsist on the procurers purchasing the entire share capital of the companyviz., the first respondent as provided therein. It is not the case of the firstrespondent that by invoking the aforesaid articles, the first respondentpurported to repudiate the contract. On the other hand, it is the commoncase that the contract continued to be alive and it has survived subject tothe claims which have been raised thereunder. This would mean that asthe consequences of failure to perform the task having been provided inthe contract in the manner provided, we should not ordinarily tarry furtherto ask as to whether this would provide the premise for a change in lawas contemplated under Article 13.1.1. We necessarily pose the questionstill, whether this would be change in law. Not that we are unmindful ofthe fact that the two bodies have concurrently found that there is nochange in law and the attempt is to dislodge such a finding by a sidewind in the manner of speaking by an attack lodged by the respondent inthe appeal.This is not a case where the first respondent has made use ofthe land for the purpose of laying the pipeline through the corridor ascontemplated and found that drawing water from the water intake systemas contemplated would have resulted in water not being available insufficient quantity through the length of the year. There is no such case.

(66) The case of the first respondent, on the other hand, is thatthe PPA having been signed on 07.08.2007, in the second week ofDecember of the very same year-2007, in order to confirm the availabilityof water through water intake system as contemplated in the first A

B

C

D

E

F

G

H

AWAPCOS report, the second report was commissioned ironically throughthe very same consultant. There is no case, whatsoever, that havingmade attempts to draw water in terms of the first WAPCOS report andhaving found that such an effort failed, they were compelled to seekrecourse to a second study albeit by the same body. No reasons areforthcoming as to what inspired the first respondent to commission theBsecond study. Secondly, this is not a case where the procurers broughtabout any change in law in the study on their own or they persuaded orcompelled the first respondent to change the corridor for the route forlaying of the pipeline. The first respondent did not even involve theprocurers in the second study. There is no intimation given that the firstCrespondent was commissioning a new study. There is no basis forthcomingas to what prompted the first respondent to commission a fresh study.What is stated is only that it wished to confirm the availability of water interms of the first water intake study. In other words, we must sum up asfollows:

D(67) Even in terms of the case built around Part II of Schedule 2to the PPA under which the performing of the task mentioned in Article3.1.2A within the time provided was to be treated as a deemed initialconsent, the consequence of failure to do that have been expressly speltout as we have already noticed. At best or at worst, it could haveempowered the first respondent to rescind the contract. That apart, weEare not in a position, for the reasons which we have indicated already, tocome to the conclusion that it would amount to change in law. While onchange in law, we may notice another aspect of the matter.

(68) Article 13.3.1 reads as follows:

F“13.3.1 If the Seller is affected by a Change in Law in accordancewith Article 13.2 and wishes to claim a Change in Law under thisArticle, it shall give notice to the Procurers of such Change inLaw as soon as reasonably practicable after becoming aware ofthe same or should reasonably have known of the Change in Law.”

G(69) Thus, the PPA contemplates that if the seller is affected bychange in law and wishes to claim change in law, it has to notify theprocurers of the change in law as soon as is reasonably practicable afterbecoming aware of the same. It may be true that on the basis of therequest made by the first respondent apparently based on the secondWAPCOS report that the first respondent has taken steps for acquiringH

the land needed for laying the pipeline. It may be true that the saidpipeline had to cross a greater distance. It is not as if it was on the basisthat the procurers rendered themselves liable in law or held themselvesliable in law to make good the escalation in cost. There is no such materialmade available indicating that the procurers have held out that they willbe liable. It is not in dispute that the first unit from the power plant wasin fact commissioned in August, 2012. In fact, when we asked as towhether 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 noticewhich was given on 15.12.2012. In this regard also, we may notice thecontents of the said notice:

“5.2 Additional expenditure incurred due to change in DeclaredPrice of Land, cost of implementation of resettlement andrehabilitation package of land, change in customs duty on miningequipment, water intake system etc.

(a) the actual expenditure incurred by SPL towards land,implementation of resettlement and rehabilitation package of landfor the project, water intakes system, customs duty on miningequipment and excise duty on cement and steel.”

(70) Therein all that is indicated is that for the water intake theoriginal cost was put Rs.92 crores whereas the estimated cost has beenRs.238 crores Contemporaneous with the change in law alleged and inkeeping with Article 13.3.1, there is no notice brought to our notice.

(71) No doubt, Shri Amit Kapur, learned counsel for the firstrespondent, did attempt to draw inspiration from the Minutes of theMeeting which took place on 20.03.2013 as per which the lead procurerappears to have agreed to the change. The case of Mr. Amit Kapur,learned counsel, that the lead procurer can bind the other procurers iscontested by Shri M. G. Ramachandran, learned senior counsel.

(72) We have noticed that a notice in terms of Article 13.3.1notifying the change in law as claimed today before the Court was notgiven at the relevant time.

(73) The argument that the procurers agreed to the acquisition ofthe land through which the new route had to travel also does not appealto us as firmly founding the claim of the first respondent in law. Thematter must be viewed from the prism of the specific provisions definingthe change in law and the actual change in law which is as we have AB

C

D

E

F

G

H

Aexplained above. In short, being awarded a contract and having enteredinto the PPA and without any basis as such in facts, the first respondentventured to commission a new study and acting on the same, a newpipeline corridor came on the scene. Necessarily the cost may go up.But the question we are to decide is as to whether it is change in law andwe are of the view that it could not be a change in law as contemplatedBin the agreement as it is not a change in initial consent which is the onlycase which has been argued in this regard.

(74) The argument further is only that the estimated cost wasRs.92 crores and a further sum in excess of the same had to be spent. Inthis regard, we may notice the following clause in the PPA:C

“5.2 The Site

The Seller acknowledges that, before entering into this Agreement,it has had sufficient opportunity to investigate the Site and acceptsfull responsibility for its condition (including but not limited to itsDgeological condition, on the Site, the adequacy of the road and raillinks to the Site and the availability of adequate supplies of water)and agrees that it shall not be relieved from any of its obligationsunder this Agreement or be entitled to any extension of time orfinancial compensation by reason of the unsuitability of the Sitefor whatever reason.E

The State Government authorities would be implementing theresettlement and rehabilitation package (“R&R”) in respect ofthe Site for the Project, for which the costs is to be borne by theSeller. The Procurers shall endeavour to ensure that the StateGovernment implements such R&R ensuring that land for differentFconstruction activities becomes available in time so as to ensurethat the Power Station and each Unit is commissioned in a timelymanner. Assistance of the Seller may be sought, which he willprovide on best endeavour basis, in execution of those activitiesof the R&R package and as per estimated costs, if execution ofGsuch activities is in the interest of expeditious implementation ofthe package and is beneficial to the Project affected persons.”

(75) Moving on to the findings actually which have been renderedby the Tribunal, the Tribunal has, in the impugned order, found that thefirst report of the WAPCOS is grossly erroneous. We are at a loss tounderstand as to what was the basis for rendering such a finding. WithoutH

any material, it is a little inexplicable as to how the Tribunal could haverendered such a finding which has serious consequences as we havenoticed. This is after finding undoubtedly that there is no change in law.Virtually, the Tribunal has brushed aside the disclaimer clauses. Beforewe go to the disclaimer clauses, we may also indicate that a perusal ofthe first WAPCOS report indicates that it is a fairly elaborate report.The second WAPCOS report apart from it being prepared withoutreference to the procurers as we have noticed does not appear to sayanything which is critical of the first WAPCOS report. At least, there is,in fact, no express whisper about the first report. All that the secondWAPCOS report seems to indicate is upon being awarded the work,WAPCOS has gone about preparing another report. At least we areunable to find as to how the Tribunal could on the basis of the secondreport find that the first WAPCOS report was grossly erroneous. TheTribunal has not undertaken a comparative study of the two reports.There is no discussion whatsoever of the two reports. Nor is there anyother material provided to render such a finding. The only area wherewe find what could perhaps be understood as a reference to the firstreport is clause 4.2.2. It reads as follows:

“4.2.2. As intimated by project authority that and acquisition ofpipeline corridor on the right side of Vallabhh Pant Sagar is in thefinal stages and other information gathered during site visit byWAPCOS/CWPRS team by local enquiry survey area ‘A’ wasidentified for detailed survey during detailed survey it is foundthat sufficient depth is not available for intake well as bed level ofthe reservoir is around 252.5 and this was also in a small patches.So, this area is discarded.”

(76) It would appear that the word ‘project authority’ accordingto Shri M.G. Ramachandran is to be understood as the first respondent.All that even clause 4.2.2 indicates is that the first respondent intimatedthat the acquisition for the pipeline corridor was in its final stages andthereafter it is indicated that during the detailed survey, it was foundsufficient depth is not available.

(77) We do not think this can be the basis for acting upon thesecond report after describing the first report as grossly erroneous.

(78) Now we may consider the disclaimer clauses. The disclaimershave their genesis in the guidelines. Note 4 of the RFP indicates that theprocurers apart from their Directors, employees must not be treated as AB

C

D

E

F

G

H

Ahaving made any representation or warranting whatsoever in respect ofany statements or omissions or the accuracy, completeness or reliabilityof information contained therein. They were not to incur any liabilityunder any law inter alia even if any loss or damage is caused to thebidder by any act or omission on their part. Again clause 1.4 of the RFPclearly indicated to the bidders that the procurers inter alia do not makeBany representation or accept any responsibility or liability in respect ofany statements or omissions made in the water intake study report andthe project report. There is a specific disclaimer also about the accuracy,completeness or reliability of information contained therein. This is evenif any loss or damage is caused to the selected bidder by any act orComission on their part. Thus, in respect of the water intake study report,the prospective seller or the bidders were specifically told in no uncertainterms that any statements or omissions in water intake study report wouldnot result in the procurers being visited with liability even if there wasloss or damage caused to the selected bidder. This must be borne inmind at this juncture for the following reasons.D

(79) The first respondent has a case that water intake systemgoes to hydrology whereas in relation to geology, the first respondentwas duty bound to make its own inquiries. Since the connect betweenhydrology and water intake system is real and since in regard to conditionsabout hydrology, the first respondent relied on the procurers or the reportEprepared by a public sector unit, in particular, they should stand relievedof any obligation to conduct any further inquiry on their own, runs theargument.

(80) We are afraid that this argument cannot hold water as theneed for making more inquiry in relation to geology cannot relieve theFbidder from the operation of other clauses. A just result in the matter ofwhat a contract produces by way of a legal relationship must be viewedholistically on a harmonious survey of all the relevant clauses. In anyother approach, the result would have the effect of rendering specificclauses dealing with the topic in question dead letter. In view of clauseG1.4 of the RFP, in other words, the bidder was duty bound if it felt advisedto check the correctness of the report made by the WAPCOS. It couldhave undertaken its own study. What it did four months after it wasgranted the contract and entered into the PPA, it could have done beforeit decided to make the bid and enter into the PPA. At least we are notshown anything which stood in the way of the bidder conducting its ownH

study and being convinced by the correctness of the report. We say thisfor the reason that what is involved is an international competitive bid.The bidding process is the foundation for the determination of the pricein terms of section 63 of the Act. The Commission approves the rates onbeing convinced that the rates are fair and competitive and arrived at onthe basis of a fair bidding process. The provisions of the RFP must,therefore, be viewed from the perspective of it placing on alert the biddersabout the imponderables which are inevitably involved in pricing process.This means that having regard to clause 1.4 of the RFP, no bidder couldpossibly come forward with the claim that the contents of the WAPCOSreport must be treated as sacrosanct and infallible and that it should notbe taken without a generous pinch of salt as it stands. At least this wasthe message which is writ large in the said clause. He who acteddisregarding the caveat about the report acted at his own peril.

(81) Again, we do notice clause 2.7.2 of the RFP which we haveindicated already. It contemplates the duty on the part of the bidder tomake independent inquiry and to satisfy itself with regard to the requiredinformation, inputs, conditions, circumstances, which may affect the bid.This is apart from the site as referred to in the PPA in clause 5.2 whichwe 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. Weare of the view that the Tribunal was wrong in brushing aside the specificand unambiguous disclaimers under which the procurers stood exoneratedfrom liability.

(83) One argument which we must notice at this stage is theeffect of Article 13.2. We have already adverted to Article 13.2. Article13.2, no doubt, indicates that while determining the consequence of changein law, the parties shall have due regard to the principle that the purposeof compensating the party affected by any change in law is to restorethrough monthly tariff payments the affected party to the same economicposition as if such change has not occurred. We have tested the hypothesisby 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 contemplated in this Article 13’ as part of the Article 13.2,it necessarily brings in clause (a) and (b) of Article 13.2. In other words,what the parties have contemplated is that consequence of change inlaw would result in it being addressed through the mechanism of monthly AB

C

D

E

F

G

H

AB

C

D

E

F

G

H

Atariff payments through supplementary bills (see Article 13.4.2). But it isto the extent as contemplated in Article 13. The question would arise asto whether the parties contemplated that it gave authority to the competentbody viz., the Commission to discard the formula which is provided inArticle 13.2(a) and (b). We are of the view that what the partiescontemplated under Article 13.2 was that change in law must be viewedBthrough the specific provisions of clauses (a) and (b). In other words, achange in law may occur during the period of construction. Then it is tobe treated as falling under Article 13.2(a). A change in law may occurduring the period of its operation. It would then appear to be dealt withunder clause (b). If a change in law takes place during the period ofCconstruction then its impact is to be measured with reference to thecapital cost of the project. The word ‘capital cost’ understandably hasbeen defined in PPA. A formula has been engrafted. The formulacontemplates that for every increase/decrease of each Rs.50 crores inthe capital cost as a result of the change in law, the increase/decrease inthe non-escalable capacity charges is to be 0.267 per cent of the non-Descalable capacity charges. No doubt, this is if the seller provides to theprocurers documentary proof of such increase/decrease in establishingthe impact of such change.

(84) In other words, the effect of change in law during theconstruction period is captured by 13.2(a). We must understand that thisEis a meticulously thought through contract which emerged after a longrigorous process. Parties were clear about how the change in law had tobe compensated and methodology has been set out clearly. Therefore,any appeal made to the general part in Article 13.2 which speaks aboutthe affected party being restored to the same economic condition as ifFsuch change in law had not occurred cannot result in departing from thespecific formula which has been set in place. This meaning is inevitablefrom the words “to the extent contemplated in this Article 13, whichprecedes the general words. In this regard, we may refer to the judgmentof this Court in Uttar Haryana Bijli Vitran Nigam Ltd. &Anr.[1]. In thesaid judgment, it has been relied upon understandably by the firstGrespondent also and which also arose under the same clause (Article13.2), this Court has held inter alia as follows:

“10. Article 13.2 is an in-built restitutionary principle whichcompensates the party affected by such change in law and which 1 Uttar Haryana Bijli Vitran Nigam Ltd. & Anr. v. Adani Power Limited & Ors. (2019)H5 SCC 325

must restore, through monthly tariff payments, the affected partyto the same economic position as if such change in law has notoccurred. This would mean that by this clause a fiction is created,and the party has to be put in the same economic position as ifsuch change in law has not occurred i.e. the party must be giventhe benefit of restitution as understood in civil law. Article 13.2,however, goes on to divide such restitution into two separateperiods. The first period is the “construction period” in whichincrease/decrease of capital cost of the project in the tariff is tobe governed by a certain formula. However, the seller has toprovide to the procurer documentary proof of such increase/decrease in capital cost for establishing the impact of such changein law and in the case of dispute as to the same, a dispute resolutionmechanism as per Article 17 of the PPA is to be resorted to. It isalso made clear that compensation is only payable to either partyonly with effect from the date on which the total increase/decreaseexceeds the amount stated therein.

13. A reading of Article 13 as a whole, therefore, leads to theposition that subject to restitutionary principles contained in Article13.2, the adjustment in monthly tariff payment, in the facts of thepresent case, has to be from the date of the withdrawal ofexemption which was done by administrative orders dated 6-4-2015 and 16-2-2016. The present case, therefore, falls within Article13.4.1(i). This being the case, it is clear that the adjustment inmonthly tariff payment has to be effected from the date on whichthe exemptions given were withdrawn. This being the case,monthly invoices to be raised by the seller after such change intariff are to appropriately reflect the changed tariff. On the factsof the present case, it is clear that the respondents were entitledto adjustment in their monthly tariff payment from the date onwhich the exemption notifications became effective. This beingthe case, the restitutionary principle contained in Article 13.2 wouldkick in for the simple reason that it is only after the order dated 4-5-2017 [Adani Power Ltd. v. Uttar Haryana Bijli Vitran NigamLtd., 2017 SCC OnLine CERC 66] that CERC held that therespondents were entitled to claim added costs on account ofchange in law w.e.f. 1-4-2015. This being the case, it would befallacious to say that the respondents would be claiming thisrestitutionary amount on some general principle of equity outside AB

C

D

E

F

G

H

Athe PPA. Since it is clear that this amount of carrying cost is onlyrelatable to Article 13 of the PPA, we find no reason to interferewith the judgment of the Appellate Tribunal.

19. Lastly, the judgment of this Court in Energy Watchdog v.CERC [Energy Watchdog v. CERC, (2017) 14 SCC 80 : (2018) 1BSCC (Civ) 133] was also relied upon. In this judgment, three issueswere set out and decided, one of which was concerned with achange in law provision of a PPA. In holding that change inIndonesian law would not qualify as a change in law under theguidelines read with the PPAs, this Court referred to Clause 13.2as follows : (SCC p. 131, para 57)

C

“57. … This being so, it is clear that so far as the procurement ofIndian coal is concerned, to the extent that the supply from CoalIndia and other Indian sources is cut down, the PPA read withthese documents provides in Clause 13.2 that while determiningthe consequences of change in law, parties shall have due regardDto the principle that the purpose of compensating the party affectedby such change in law is to restore, through monthly tariffpayments, the affected party to the economic position as if suchchange in law has not occurred.”

There can be no doubt from this judgment that the restitutionaryEprinciple contained in Clause 13.2 must always be kept in mindeven when compensation for increase/decrease in cost isdetermined by CERC.”

(Emphasis supplied)

F(85) We are of the view that the view which we have taken doesnot in any way conflict with the view which has been laid down by thisCourt.

(86) No doubt, in Energy Watchdog[2]again a judgment which isrelied upon by both the sides, the Court was dealing with a case underthe Act and has expressed the following view:G

“19. The construction of Section 63, when read with the otherprovisions of this Act, is what comes up for decision in the presentappeals. It may be noticed that Section 63 begins with a non 2 Energy Watchdog v. Central Electricity Regulatory Commission and Others (2017)H14 SCC 80

obstante clause, but it is a non obstante clause covering only Section62. Secondly, unlike Section 62 read with Sections 61 and 64, theappropriate Commission does not “determine” tariff but only“adopts” tariff already determined under Section 63. Thirdly, such“adoption” is only if such tariff has been determined through atransparent process of bidding, and, fourthly, this transparentprocess of bidding must be in accordance with the guidelines issuedby the Central Government. What has been argued before us isthat Section 63 is a standalone provision and has to be construedon its own terms, and that, therefore, in the case of transparentbidding nothing can be looked at except the bid itself which mustaccord with guidelines issued by the Central Government. Onething is immediately clear, that the appropriate Commission doesnot act as a mere post office under Section 63. It must adopt thetariff which has been determined through a transparent processof bidding, but this can only be done in accordance with theguidelines issued by the Central Government. Guidelines have beenissued under this section on 19-1-2005, which guidelines have beenamended from time to time. Clause 4, in particular, deals withtariff and the appropriate Commission certainly has the jurisdictionto look into whether the tariff determined through the process ofbidding accords with Clause 4.

20. It is important to note that the regulatory powers of the CentralCommission, so far as tariff is concerned, are specificallymentioned in Section 79(1). This regulatory power is a generalone, and it is very difficult to state that when the Commissionadopts tariff under Section 63, it functions dehors its generalregulatory power under Section 79(1)(b). For one thing, suchregulation takes place under the Central Government’s guidelines.For another, in a situation where there are no guidelines or in asituation which is not covered by the guidelines, can it be said thatthe Commission’s power to “regulate” tariff is completely doneaway with? According to us, this is not a correct way of readingthe aforesaid statutory provisions. The first rule of statutoryinterpretation is that the statute must be read as a whole. As aconcomitant of that rule, it is also clear that all the discordantnotes struck by the various sections must be harmonised.Considering the fact that the non obstante clause advisedly restrictsitself to Section 62, we see no good reason to put Section 79 out AB

C

D

E

F

G

H

AB

C

D

E

F

G

H

Aof the way altogether. The reason why Section 62 alone has beenput out of the way is that determination of tariff can take place inone of two ways — either under Section 62, where the Commissionitself determines the tariff in accordance with the provisions ofthe Act (after laying down the terms and conditions fordetermination of tariff mentioned in Section 61) or under SectionB63 where the Commission adopts tariff that is already determinedby a transparent process of bidding. In either case, the generalregulatory power of the Commission under Section 79(1)(b) isthe source of the power to regulate, which includes the power todetermine or adopt tariff. In fact, Sections 62 and 63 deal withC“determination” of tariff, which is part of “regulating” tariff.Whereas “determining” tariff for inter-State transmission ofelectricity is dealt with by Section 79(1)(d), Section 79(1)(b) is awider source of power to “regulate” tariff. It is clear that in asituation where the guidelines issued by the Central Governmentunder Section 63 cover the situation, the Central Commission isDbound by those guidelines and must exercise its regulatory functions,albeit under Section 79(1)(b), only in accordance with thoseguidelines. As has been stated above, it is only in a situation wherethere are no guidelines framed at all or where the guidelines donot deal with a given situation that the Commission’s generalEregulatory powers under Section 79(1)(b) can then be used.”(87) It is true that as far as the said case is concerned, the casearose from claims which were made under the PPA on the basis thatthere were changes in law apart from the argument that a case of ForceMajeure was made out. It is not a case which actually on facts involved Fthe Court dealing with a case arising from the fixation of tariff underSection 63. In fact, it arose after a PPA was approved and the rateswere fixed already under Section 63. However, if we notice the contentsof para 19 and 20, the principle which the first respondent seeks tocanvas before us does not appear to emerge. The argument of the first respondent is that even de hors the terms of the contract, there is generalGregulatory power available under Section 79 of the Act. There is anoverarching authority with the Commission exercising power underSection 79 which would enable it and which would empower it to grantcompensation even de hors the terms of the contract it is contended.The argument appears to be that unlike generality of contracts, a regulatedHcontract which is a long term contract or an incomplete contract generates space for power with the appropriate regulatory body to revisit the ratesand thereby vouchsafe a fair deal to both sides, be it a seller or theprocurer.

(88) What this Court has laid down in para 19 and 20 in EnergyWatchdog[3]may be summarized as follows:

(89) In the case of fixation of tariff under Section 63 of the Act,what is contemplated is to begin with guidelines which have been issuedunder Section 63. When the Commission is asked to exercise powerunder Section 63, it is beholden to the guidelines as it cannot depart fromthe same. In a area where the guidelines do not occupy the field,undoubtedly, the Commission is clothed with power as a regulatory bodyto act in the best interest of all sides and to fix the tariff in a mannerwhich is fair in the sense bearing in mind the paramount interest ofincreased generation of power, the interest of the consumer, as alsoensuring of a fair return to the seller. So far so good. When the Commissionexercises the power under Section 63, this power is not abridged whenthere are no guidelines holding the field.

(90) We are not dealing with a case where the exercise of powerof the Commission under Section 63 is under review. In a case where,however, the rates are approved under Section 63 and PPA is enteredinto, the question would undoubtedly arise as to whether there is a powerwhich can be described in a manner of speaking to be plenary powerwith the Commission under Section 79? Can there be a power whichcan be christened as omnibus? Can the Tribunal, in other words, disregardthe express words of the contract? Can it discover a new change in lawwhich the parties have not contemplated as change in law? In short, canthe Tribunal rewrite the contract and create a new bargain?

(91) We are of the view that the Tribunal cannot indeed make anew bargain for the parties. The Tribunal cannot rewrite a contractsolemnly entered into. It cannot ink a new agreement. Such residuarypowers to act which varies the written contract cannot be located in thepower to regulate. The power cannot, at any rate, be exercised in theteeth of express provisions of the contract.

(92) We notice this for the reason that the first respondent has acase that what is provided in Article 13.2(a) (since we are dealing with 3 Energy Watchdog v. Central Electricity Regulatory Commission and Others (2017) 14SCC 80

A

B

C

D

EF

G

H

Athe case of alleged change in law during the construction period) doesnot do justice to the parties or that it is incapable of producing a fairresult and therefore, the Tribunal would necessarily be clothed with powerbearing in mind its regulatory nature. In a matter where the parties haveentered into a contract with express provisions, we are unable to agreewith the first respondent that the Tribunal would have power to disregardBthe express provisions of the contract on the score that as it turns outthat with passage of time and even change in circumstances, it is foundthat the contract cannot be worked except at a loss for the contractor.

(93) We may, at this juncture, also notice an argument which hasbeen raised by Shri Amit Kapur, learned counsel for the first respondent,Cwhen queried as to what would be the position if a claim of the naturewere canvassed in a civil suit. The answer came that Section 18 and 19of the Indian Contract Act, 1872 (hereinafter referred to as ‘ContractAct’ for brevity), provided the gateway. Section 18 of the Contract Actdeals with the effect of representation or rather misrepresentation by aDparty made to another party to the contract. It, undoubtedly, includes arepresentation, however, innocent it may be. In other words, an innocentrepresentation made to one party by another party which forms the basisfor consent of the person can lead to the contract becoming voidableunder Section 19. It is undoubtedly true that Section 19 also contemplatesthat the wronged party can insist upon the contract being performed andEfurther, however, persevere in requiring that he be placed in the sameposition if he had not been led astray by the misrepresentation. Theremay be no dispute about this principle. However, we have noticed thevarious clauses as contained in the disclaimer clauses. When a party tothe contract states that what is contained in the first WAPCOS reportFand anything else as contemplated in the RFP and the PPA does notamount to a representation, we are unable to agree with the contentionthat it would still be considered as a representation within the meaningof Section 18 and thereby leading to a claim under Section 19 of theContract Act. Therefore, we find that the contentions which the firstrespondent seeks to raise under the provisions of Section 18 and 19Guntenable.

(94) Reliance was placed on the judgment of this Court PTC IndiaLimited v. Central Electricity Regulatory Commission (2010) 4 SCC603. In PTC India Limited[4], the actual question which arose was as to 4 PTC India Limited v. Central Electricity Regulatory Commission (2010) 4 SCC 603H

whether the appellate Tribunal under the Act has jurisdiction under Section111 to examine the validity of regulations framed in exercise of powerunder Section 178 of the Act. The further question which arose waswhether Parliament has conferred power of judicial review on theTribunal under Section 121 of the Act. In the course of this judgment,the Court inter alia held as follows:

“53. Applying the abovementioned tests to the scheme of the 2003Act, we find that under the Act, the Central Commission is adecision-making as well as regulation-making authority,simultaneously. Section 79 delineates the functions of the CentralCommission broadly into two categories —mandatory functionsand advisory functions. Tariff regulation, licensing (including inter-State trading licensing), adjudication upon disputes involvinggenerating companies or transmission licensees fall under the head“mandatory functions” whereas advising the Central Governmenton formulation of National Electricity Policy and tariff policy wouldfall under the head “advisory functions”. In this sense, the CentralCommission is the decision-making authority. Such decision-makingunder Section 79(1) is not dependent upon making of regulationsunder Section 178 by the Central Commission. Therefore, functionsof the Central Commission enumerated in Section 79 are separateand distinct from functions of the Central Commission underSection 178. The former are administrative/adjudicatory functionswhereas the latter are legislative.

55. To regulate is an exercise which is different from making ofthe regulations. However, making of a regulation under Section178 is not a precondition to the Central Commission taking anysteps/measures under Section 79(1). As stated, if there is aregulation, then the measure under Section 79(1) has to be inconformity with such regulation under Section 178. This principleflows from various judgments of this Court which we havediscussed hereinafter. For example, under Section 79(1)(g) theCentral Commission is required to levy fees for the purpose ofthe 2003 Act. An order imposing regulatory fees could be passedeven in the absence of a regulation under Section 178. If the levyis unreasonable, it could be the subject-matter of challenge beforethe appellate authority under Section 111 as the levy is imposedby an order/decision-making process. Making of a regulation underSection 178 is not a precondition to passing of an order levying a AB

C

D

EF

GH

64SUPREME COURT REPORTS

[2023] 8 S.C.R.

Aregulatory fee under Section 79(1)(g). However, if there is aregulation under Section 178 in that regard then the order levyingfees under Section 79(1)(g) has to be in consonance with suchregulation.”

(95) We are unable to see how the said judgment can advanceBthe case of the first respondent. The question which fell for considerationand the opinion which has been rendered do not in any way detract fromthe view which we have taken. Substantially, it was held that the makingof regulation was not a pre condition for levying a regulatory fee underSection 79(1)(g). It is no doubt true that Commission has an adjudicatoryfunction. It is also empowered to give opinions. Power to frame regulationsCindicates that it also has legislative powers. The point is that since in thiscase we are concerned with the adjudicatory function of the Commission,we are concerned with the trammels to which it is subject in the form ofthe express terms of the contract. All that we are holding is that in acase where the matter is governed by express terms of the contract, itDmay not be open to the Commission even donning the garb of a regulatorybody to go beyond the express terms of the contract. It is apposite thatwe notice para 58 reads as follows:

“58. One must understand the reason why a regulation has beenmade in the matter of capping the trading margin under SectionE178 of the Act. Instead of fixing a trading margin (including capping)on a case-to-case basis, the Central Commission thought it fit tomake a regulation which has a general application to the entiretrading activity which has been recognised, for the first time, underthe 2003 Act. Further, it is important to bear in mind that makingof a regulation under Section 178 became necessary because aFregulation made under Section 178 has the effect of interferingand overriding the existing contractual relationship between theregulated entities. A regulation under Section 178 is in the natureof a subordinate legislation. Such subordinate legislation can evenoverride the existing contracts including power purchaseagreements which have got to be aligned with the regulationsGunder Section 178 and which could not have been done acrossthe board by an order of the Central Commission under Section79(1)(j).”

(96) While it may be open as indicated therein for a regulation toextricate a party from its contractual obligations, in the course of itsH

adjudicatory power it may not be open to the Commission by using thenomenclature regulation to usurp this power to disregard the terms ofthe contract.

(97) Another argument which has been raised on behalf of thefirst respondent is that the guidelines were framed on 19.01.2005. Clauses4.7 and 5.17 came to be, however, modified before the PPA was enteredinto and even prior to the RFP and therefore, the PPA and Article 17.3therein has been cast in the widest terms.

(98) We have already perused Article 17.3.1. Article 17.3 to beginwith, speaks of specific instances which can trigger the dispute resolutionmechanism. A case in point and close to facts is a dispute arising from achange in law, after a claim is denied and a resolution through settlementnot being arrived at. There are other specific clauses which are part ofthe PPA which are adverted to in the later part of Article 17.3.1.Therefore, the argument is raised on behalf of the first respondent thatthe opening words of Article 17.3.1 are designedly broad to cater tosituations such as are represented by the facts of this case. In otherwords, even irrespective of a situation being not governed by Article13.1 in order that the restitutionary principle or the principle of anincomplete contract leading to a lifelong regulation assuring a fair returnto the seller is observed, the power of revisiting of the rates is what iscontemplated in the amended guideline which finds enshrinement inArticle 17.3.1., it is contended.

(99) In fact, when we notice the PPA, we find that apart frommatters which are expressly referred to in Article 17.3.1, viz., Articles4.7.1, Article 13.2, Article 18.1 or clause 10.1.3 of Schedule 17, thereare other Articles in the PPA with which Article 17.3.1 can bear nexuswith. They include apparently, Articles 4.5.2, 11.6.6 and 11.6.7. This isbesides 12.7(e) which relates to enforcement of claims under ForceMajeure. Therefore, it is not as if Article 17.3.1 is not to be understoodwithout reference to the other parts of the contract. No Court shouldattempt to read a part of the contract in isolation. The draftsman of acontract of the nature we are dealing with would have not left any stoneunturned in making the contract one to be construed with a great senseof harmony and care. Therefore, we do not accept the contention of thefirst respondent that the Commission, Tribunal and this Court must pourin meaning into the opening words of Article 17.3.1 so that in the facts,the first respondent can claim compensation on the basis that it hasincurred expenditure acting on the first WAPCOS report.

AB

C

D

E

F

G

H

A(100) Here, we must notice finally, that substantially, the claim inregard to the water intake system was founded on the reliance placedon the first WAPCOS report and on the strength of the second WAPCOSreport.

(101) We also find reinforcement in our view from the followingclauses 1.2.12:B

“1.2.12 Different parts of this Agreement are to be taken asmutually explanatory and supplementary to each other and if thereis any inconsistency between or among the parts of thisAgreement, they shall be interpreted in a harmonious manner so”as to give effect to each part.C

(Emphasis supplied)

(102) An argument was raised by Shri Amit Kapur that the contractin the case calls for the application of the principle of contra proferentemrule.

D(103) We are of the view that the principle of contra proferentemis ordinarily utilised in contracts of insurance and standard form contracts.

(104) The principle of contra proferentem apparently in substanceis that in case of any doubt in its terms, the doubt should be resolvedagainst the party who drafted the contract. We would not think in thefacts of this case that the first respondent has been able to plant anyEserious doubt in regard to the clauses with which we are concerned withon a true understanding of the same.

(105) The second complaint- The Office Memorandum dated17.06.2011.

As far as the question relating to the OM dated 17.06.2011Fproviding the premise for change in law claim is concerned, weare of the view that the claim may not have merit in it. It is truethat Article 13.1.1 inter alia provides that a change can be broughtabout by the issuance of a notification by an Indian Governmentalauthority. Also a change in interpretation of any law by an IndianGGovernmental instrumentality inter alia provided that it is finalauthority under law for such interpretation would constitute achange in law.

Indian Governmental Instrumentality is defined as follow: - “Indian Governmental Instrumentality” means the GOI,Government of States where the Procurers and Project are located H

and any ministry or department of or board, agency or otherregulatory or quasi-judicial authority controlled by GOI orGovernment of States where the Procurers and Project are locatedand includes the Appropriate Commission;”

(106) Law as defined in the PPA is as follows:

“Law” means, in relation to this Agreement, all laws includingElectricity Laws in force in India and any statute, ordinance,regulation, notification or code, rule, or any interpretation of anyof them by any Indian Governmental Instrumentality and havingforce of law and shall further include all applicable rules,regulations, orders, notifications by an IndianGovermentalInstrumentatlity pursuant to or under any of themand shall include all rules, regulations, decisions and orders of theAppropriate Commission;

(107) While the word ‘competent Court’ which can also be thesource of a change in interpretation of any law is expressly defined inArticle 13.1.1., when it comes to the Indian Governmental instrumentalitywhich is the final authority, is concerned, there is no definition in thePPA. The controversy is this.

(108) The first respondent allegedly imported goods for the purposeof construction of the captive mining plant. It is its case that the goods soimported were being used for construction of the mining plant whichwas in turn was utilised for the construction and operation of the ultramega power plant project. Such goods according to the first respondentwas expressly exempted from customs duty by virtue of the notificationholding the field. The notifications holding the field it must be understoodwere the notifications holding the field before the cut off date. The cutoff date admittedly is 21.07.2007. In other words, the said date is thedate which is seven days before the bid deadline. The OM which is thepremise for the argument has been issued by the Director no doubt withthe approval of the Joint Secretary in the Ministry of Power. It reads asfollows:

“No. 12/20/2009-UMPP

Government of IndiaMinistry of Power

Shram Shakti Bhawan, Rafi marg,

A

BC

D

EF

G

H

A

B

C

New Delhi, the 17th June, 2011

OFFICE MEMORANDUM

Sub: 3960 MW Sasan Ultra Mega Power Project, Distt. Singrauli- Exemption from Custom Duty under project Import - reg.

The undersigned is directed to refer to Govt. of Madhya Pradesh’sletter No. 4468/13/2011/01 dated 24.05.2011 on the subjectmentioned above and to say that under Mega Power Policy, theCustom/Excise Duty exemption is given in respect of powerequipment only.

This issues with the approval of JS (Thermal), Ministry of Power (A.A. Tazir)Director Shri Mohd. Suleman DSecretary (Energy)

Govt. of Madhya Pradesh,

Bhopal”

(109) It is the contention of the first respondent that when itEimported the goods it had to pay customs duty on the same and itconstituted a change in law as the OM issued by the Joint Secretary placing the interpretation constituted a change in interpretation.

(110) In other words, in contrast with the law as it stood beforethe cut off date, by the issuance of the OM by the Joint Secretary in theFMinistry of Power, a change in interpretation of the law is brought about.This sufficed to found a claim of change in law within the meaning ofArticle 13.1.1

(111) The argument of the procurers, on the other hand, is as wehave noticed is that the OM cannot be found to be issued by aGovernmental instrumentality which can be treated as the final authorityGunder law for such interpretation. It is for the reason that the notificationgranting exemption has been issued by the authority under the CustomsAct and the Joint Secretary in the Ministry of Power is not such anauthority. Secondly, it is the contention of the procurers that the mattershould have been taken before the appropriate forum by the firstHrespondent 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 topass on the burden without taking recourse to law. Thirdly, it is contendedthat the fact of the matter is that the position even before the cut offdate was that goods in question were not exempt.

(112) Since we are dealing with the notifications, we notice thatthe authority on Advance Ruling has gone into the history of thenotifications and dealt with the same though in the context of the right toexemption 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 introducedfor the first time in 1999. As pointed out by the learned Sr. counselfor the applicant, the introduction of this Entry in the Customsnotification seems to be a follow up to the policy decision takenby the Central Government as set out in the communication dated10.11.1995 addressed by the Secretary, Ministry of Power,Government of India and the revised policy/guidelines relating toMega power projects issued in 1998. The policy formulated in1995 was in relation to the “setting up of power plants of capacityof 1000 MW or more supplying power to more than one state”. Inthat policy document, it is stated that the “project of capacity of1000 MW and more and catering power to more than one stateshould be considered as a mega project. Projects which caterpower to a single State, irrespective of size, would not come underthis category”. In the policy which has been recast in 1998, it wasdecided that inter-state and inter-regional mega power projectswere to be set up both in the public and private sectors. The re-organization of the public sector corporations was also envisagedby the policy. The policy contemplates the beneficiary Statesconstituting Regulatory Commissions with powers to fix tariff.Paragraph 5 of the guidelines is important. It says “the import ofcapital equipment would be free of custom duty for these projects”.In order to ensure that domestic bidders were not adverselyaffected, certain safeguards were spelt out.”

7.2 Entry/ Sl.No. 288A of Ch. 98.01 inserted by Notification No.63/1999 substantially gives effect to the 1995 policy read withrevised policy of 1998. The same concept of mega power projectis to be found in that Entry. The Entry reads:

A

B

CD

EF

G

H

A

B

Condition No. 82 is as follows: -C

82. (a) If an officer not below the rank of a Joint Secretary to theGovernment of India in the Ministry of Power certifies that-

(i) the power purchasing state undertakes, in principle, to privatizedistribution in all cities, in that State, each of which having aDpopulation of more than one million within a period to be fixed bythe Ministry of Power; and

(ii) In the case of imports by a Central Public Sector Undertaking,the quantity, total value, description and specifications of theimported goods are certified by the Chairman and ManagingEDirector 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 goodsare certified by the Chief Executive Officer of such project”.

“7.3 List 33 specifies by name the thermal projects and hydelFprojects in respect of which exemption is made applicable. Then,under Customs Notification No. 100 of 99 dated 28/7/99, thecapacity of thermal power project specified in the earlier notificationwas 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 CustomsGNotification No. 16 of 2000 and 17 of 2001 which are substantiallythe same excepting that the number of thermal and hydel projectsspecified in List 33 has gone down.”

“7.5 Then comes the Customs Notification No. 21 of 2002 dated01.03.2002 which is material for our purpose. It reads as follows:- H

“7.6 Entry 400 was amended by the Notification No. 26/2003.The said amendment was necessitated by reason of the policy decisiontaken by the Government as reflected in the Union budget speech of203-04. The following extract from the budged speech is relevant:

“Simultaneous to the emphasis on improvement in powerdistribution, our attention on capacity addition remains. TheGovernment had earlier, in 1999, notified 18 power projected asmega projects, conferring upon them various duty and licensingbenefits. The Government now proposes to liberalise the megapower project policy further by extending all these benefits to anypower project that fulfills the conditions already prescribed formega power projects”.

Pursuant to the above policy, Notification No. 26/2003-Cus. Wasissued amending the notification no. 21/2002-Cus. Entry 400 asamended reads:

A

B

C

D

E

F

G

H

A“7.7 The amended notification no. 21 of 2002 is almost in thesame language as it stands now (vide para 3 supra). Thus, w.e.f.1/4/2003, the list of specified power projects has been deleted intune with the liberalized policy of the Government. Further, it is tobe mentioned that Entry 400 of notification no.21 of 2002 wasfurther amended keeping in view the revised policy guidelinesBissued in order to cater to the special requirements of powerprojects in Jammu and Kashmir and NE States. Entry 399substantially remained the same from 1999 onwards exceptingthat there was change in the Sl. No. and the rate.”

A

(113) The order of the Advance Ruling Authority is datedC19.12.2008. No doubt, it is after the cut off date. The case of the firstrespondent is not based on the order of the Advance Ruling Authority.The case of the first respondent is specifically based only on the OMissued by the Joint Secretary in the Ministry of Power. We may noticethat Joint Secretary in the Ministry of Power has a role in terms of theDnotification. The role assigned to him is contained in condition 82 to thenotification 63/1999 and this condition has continued thereafter also. Thecondition as we have noticed is that it is stated that an officer not belowthe rank of a Joint Secretary is to certify the aspects which are mentionedin condition 82.

E(114) It is difficult, in fact, to describe the Joint Secretary in theMinistry of Power as the Governmental authority which is the finalauthority under the law. The final authority under the law would be theauthority under the Customs Act which issues the exemption notification.But we would not wish to rest our findings on the said basis as we feelthat the objection of the procurers can rest on surer foundations. TheFfirst respondent also relies upon no doubt, the notification dated 26.05.2006wherein it is indicated as follows:

“Notification No.49/2006-Customs

In exercise of the poowers conferred by sub-section (1) of Section25 of the Customs Act, 1962 (52 of 1962), the Central Government,on being satisfied that it is necessary in the public interest to doso, hereby makes the following further amendments in thenotification of the Government of India in the Ministry of finance(Department of Revenue) No.21/2002- Customs, dated the 1stMarch, 2002, which was published in the Gazette of India, G

H

Extraordinary vide number G.S.R. 118(E), dated the 1st March,2002, namely:-

(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, socertified by an officer not below the rank of Joint Secretary tothe Government of India in the Ministry of Power, that is tosay- (a) an inter-state thermal power plant of a capacit of 700MWor 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 1000MWor more, located in States other than those specified in clause(a)above; or

(c) an inter-state hydel power plant of a capacity of 350MWor 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 500MWor 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,privatize distribution in all cities, in that State, each of whichhas a population of more than one million, within a period to befixed by the Ministry of Power.”

(115) The Tribunal has, in fact, proceeded on the basis that thegoods in question would fall under Entry 400 relating to power projectsand therefore, they were exempted. The Tribunal proceeded further onthe basis that the notification dated 17.06.2011 issued by the Joint Secretaryamounted to an interpretation which constitutes a change in law.

(116) We are of the view that the approach of the Tribunal cannotbe upheld. There is no material, whatsoever, apart from the notifications A

B

C

D

E

F

G

H

Ato indicate that the goods in question were being treated as exempt beforethe cut off date. In other words, it was incumbent upon the first respondentto produce incontestable material establishing that the goods were exemptand were being treated so before the cut off date. The best materialwould have been examples of similar cases where goods were beingtreated as exempt. Even though, it is pointed out that the first respondentBwas the only ultra mega power plant, even then power plants includingmega power plants were operational. It is difficult to conceive that therewould not be a single case where similar inputs by way of examples ofother power projects even if it is not ultra mega power projects wouldnot have operated for the first respondent to draw from.

C(117) The word law has been defined as we have noticed. Whilethe expression ‘Indian Governmental Instrumentality’ is used in thedefinition of the word law in Article 13.1.1, the change in interpretationof any law by an Indian governmental authority must be the final authorityunder the law for such interpretation. It may be difficult to attribute toDthe Joint Secretary in the Ministry of Power the position of an IndianGovernmental Authority who has the final authority under the law. Butas we have indicated this must not be treated as the basis on which wedisagree with the Tribunal.

(118) The perusal of the OM does not advance the case of theEfirst respondent for yet another good reason. He does not in the OMindicate that the goods in question had been exempted before the cut offdate and that the goods becoming exigible to duty on the date after thecut off date. The Authority for Advance Ruling has categorically affirmedthat the goods of the type with which we are concerned may not qualifyfor exemption. The appellants have a case that, in fact, the Joint SecretaryFwas essentially following the Advance Ruling. While it is true that theAdvance Ruling may not bind the first respondent as it is not a party, andthe respondent could not have sought a ruling under the law, it isundoubtedly an aspect which otherwise adds strength to the case of theappellants. There may be cases where placing the notification holdingGthe field before the cut off date side by side to the subsequent notificationor an interpretation issued after the said cut off date, the Commission ora Tribunal could find that there is change in law, which added to the costto the seller. On the other hand, when the case of the first respondentinvolves interpretation of the terms of the notification then particularlywhen two views are fairly competing for acceptance before the body, atH

best, we would think that the Tribunal has hazarded taking a perilousroute in venturing to find that the OM issued by the Joint Secretaryconstituted the change in law. Though reliance has been placed on thejudgment of this Court reported in Manohar Lal Sharma v. PrincipalSecretary &Ors. (2014) 9 SCC 516 and Manohar Lal Sharma v.Principal Secretary &Ors. (2014) 9 SCC 614 which decisions purportedto exempt the mining leases which were captive leases operating for thepurpose of the power projects including the power projects specificallyin question from the purview of its decision, we do not think that that byitself can determine the question as to whether the goods which wereimported for the purpose of the captive mining plant was ever exempt.What was exempt has been goods imported for the purpose of the Powerproject. In other words, as to whether the goods in question were goodswhich fell within one entry or the other is in this case a matter which ishighly disputed and the premise of the first respondent viz., the OM ofthe Joint Secretary cannot be treated as being a sound foundation formaking such a claim.

(119) The parties indeed contemplated a project to be constructedand operated. The word ‘project’ we find has been used in many clausesin 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 theterms 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 allthe Units; (b) any associated fuel handling, treatment or storage facilities ofthe power generation facility referred to above;

(c) any water supply, treatment or storage facilities required forthe operation of the power generation facility referred to above; (d) the ash disposal system including ash dyke; AB

C

D

E

F

G

H

A(e) township area for the staff colony; and(f) bay/s for transmission system in the switchyard of the powerstation, (g) all the other assets, buildings/structures, equipments, plant andmachinery, facilities and related assets require for the efficientBand economic operation of the power generation facility; whether completed or at any stage of development andconstruction or intended to be developed and constructed as perthe provisions of this Agreement.”

C(121) Since the word ‘captive coal mine’ has also been referredto as part of the definition of the word ‘project’, it is only right that weadvert to the definition:

“Captive Coal Mine(s) means the captive coal mines as describedin Schedule 1A and associated fuel transport system up to thePower Station;”D(122) ‘Project Documents” again has been defined. We mayalso notice the definition of the words ‘Prudent Utility Practices’:

“Project documents Mean

a) Construction Contracts;E

b) Fuel mining agreements, including the Fuel TransportationAgreement, if any;

c) O&M contracts;

d) RFP and RFP Project Documents; andF

e) any other agreements designated in writing as such, from timeto time, jointly by the Procurers and the Seller; “Prudent Utility Practices means the practices, methods andstandards that are generally accepted internationally from time totime by electric utilities or coal mining entities for the purpose ofGensuring the safe, efficient and economic design, construction,commissioning, operation and maintenance of coal mines and powergeneration equipment and mine of the type specified in thisAgreement and which practices, methods and standards shall beadjusted as necessary, to take account of:

H

a) operation and maintenance guidelines recommended by themanufacturers of the plant and equipment to be incorporated inthe Project;

b) the requirements of Indian Law; and

c) the physical conditions at the Site;”

(123) We have set out the history of the notifications relating togrant of exemption for power projects. All of it began with the policyissued in the year 1995. The exemptions had their origin with thenotification issued in the year 1999. Thereafter there is Notification 21/2002 which was issued on 01.03.2002. Entry 400 in the said notificationreads as follows:

A

B

C

D

E

F

GH

A(124) Thereafter another notificationnamely Notification No. 26/03which has given a final shape to it came to be issued which has beennoticed also by the Authority of Advance Ruling. It reads as follows:

B

C

(Emphasis supplied)

D(125) We may notice that with the issuance of the said notificationwhat stands out is the following:

(126) While in the opening words of the Entry, there is referenceto power project, it is conditioned by the words ‘that is to say’. We canquite safely proceed on the basis that Entry 400 in the Notification No.E21/2002 which came into effect on 01.03.2002 as amended by NotificationNo. 46/2008 is the Entry which must be treated as holding the field as onthe cut off date. It is thereafter, no doubt, that the first respondent hasinvoked the change in law clause by seeking to draw inspiration fromthe OM issued on 17.06.2011.

F(127) Change in law clause is sought to be invoked apparentlycontending that there has been a change in interpretation by IndianGovernmental Authority which has the final say in terms of the law. Thequestion which looms large before the Court is whether there has beena change in law in terms of ‘change in interpretation’ placed by theGovernmental authority with reference to the position obtaining underGthe notifications issued under the Customs Act. Even the clauses in thePPA which we have referred to maintain a distinction between a powerplant and a captive mine. A power plant cannot be treated as the sameas captive mine. In fact, Schedule 1A which defines the site refers tothe captive mines in terms of the coal blocks which are allotted. TheHdefinition of captive mine also indicates that it is the coal mines as

described in Schedule 1A and the associated fuel transport system up tothe power station. No doubt, the word ‘site’ has also been defined as theland over which the Project will be developed as provided in Annexure1A.

(128) Undoubtedly, in view of the very purpose of having a coalmine which is to supply the requisite fuel for the operation of the powerplant, there would be a certain measure of geographical contiguity. Butthe question for the consideration before this Court is whether that woulddecide the fate of the contents of a notification issued under the CustomsAct.

(129) We must notice that it is not as if the first respondent is theonly person which had a right to claim the benefit of exemption on thebasis that the goods which have been imported for the purpose of theircaptive mine must be treated as goods used in the power project. As thehistory of the notifications as captured in order of the Advance RulingAuthority would show over a period of time, there have been a numberof power plants which have sprung up. All of them would also be usingcaptive mines for the purpose of generating power. It is not as if therewould be a dearth of examples of exemption being extended to importsmade by them and claiming the benefit of exemption under thenotification. Not a single instance of an exemption granted to any otherproject where goods imported for use in the captive mine has beenproduced before the Commission, the Tribunal or even this Court. Thisgoes a long way to negate the claim of the first respondent that whatwas once exempt has ceased to be exempt only by virtue of the issuanceof the OM dated 17.06.2011.

(130) There is another very important circumstance which strikesus. The material which appeals to us is to be found undoubtedly in theorder of the Advance Ruling Authority relied upon by the appellant. Theapplication, no doubt, is filed in the year 2008. What impresses the Courtthe most is the stand of the customs authorities before the AdvanceRuling Authority. We cannot proceed on the basis that the controversywhich led to the seeking of the ruling and far more importantly thepersistent stand of the customs authority before the Advance RulingAuthority would not shed light on how the Department viewed the matter.This is important as it is the customs department which has issued theexemption notification. Being the authors of the notification, they wouldbe best placed to understand the width and purport of a notification A

B

CD

E

F

G

H

Agranting exemption. They have stoutly opposed the application and laidout various grounds which, no doubt, has appealed also to the AdvanceRuling Authority. This is an aspect which goes a long way to show thatthe view of the customs authority which in a manner of speaking canalso be viewed as forming contemporaneaexpositio should not beignored by this Court.B

(131) The first respondent also sought considerable reliance inthis regard from the Mega Power Projects: Revised Policy Guidelines.The relevant portions reads as follows:“MEGA POWER PROJECTS: REVISED POLICYCGUIDELINES

The following conditions are required to be fulfilled by the developerfor grant of mega project status:-

a) an inter-state thermal power plant of a capacity of 700 MW ormore, located in the States of Jammu and Kashmir, Sikkim,DArunachal Pradesh, Assam, Meghalaya, Manipur, Mizoram,Nagaland and Tripura; or

b) an inter-state thermal power plant of a capacity of 1000 MWor more, located in States other than those specified in clause (a)above; or E

c) an inter-state hydel power plant of a capacity of 350 MW ormore. 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 500 MW orFmore, 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 GovernmentGof 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 capitalequipment would be free of customs duty for these projects.”

(132) The understanding of the Authority for Advance RulingHappears to be that as far as the entitlement to exemption under the notification is concerned a mega power project has to be understood asconfined 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 tosuggest that it is capable of embracing within its scope a captive minefrom which the fuel is generated to run the power plant, when it came tothe actual beneficiary of entry 400, the maker of the notification hasconfined the exemption to the goods for the purpose of the power plant.In other words, the word power project has been conflated with thepower plant. This appears to be the soul of the reasoning of the AdvanceRuling Authority. While we are aware that the first respondent is notbound by the said Ruling as it is not a party, we do not find it erroneouson our part in finding merit in the logic of the same or adopting the samefor the purpose of deciding the question which squarely arises beforethis Court viz., whether there is a change in law.

(133) There is also merit in the contention of the appellant that forarticle 13.1.1 to be successfully invoked by the seller, it must demonstratethat there was an interpretation earlier to or as on the date of the cut offdate which was advantageous to the seller and there has been a changein the said interpretation after the cut off date.

(134) In other words, the OM issued with the approval of theJoint Secretary in the Ministry of Power does not indicate that it is acase of a change in interpretation. He does not say that the positionadumbrated in the OM represents a shift or a change from what theposition was prior to the cut off date. This is apart from any materialbeing available to show that there was an interpretation in favour of thefirst respondent prior to the cut off date.

(135) We reiterate that no instance of exemption to goods ofsimilar nature being imported by any person for the captive mine as partof a power project be it mega or ultra mega plant is placed before theCommission. It is one thing to say that in a popular sense and it could beurged and it may be true that the word project has been defined in thePPA as power plant and the captive coal mine, but as we have noticedthis is a matter to be determined on what was intended by the author ofthe notification under Section 25 of the Customs Act and the matter is tobe further determined with reference to the express terms of theNotification. Even more importantly, the question must fall to be decidedwith reference to the interpretation available prior to the cut off date andafter cut off date. The communication, which is the OM dated 17.06.2011

AB

C

D

E

F

G

H

Arelied upon by the first respondent appears to have been issued on thebasis of the request made by the first respondent to the State of MadhyaPradesh.

(136) Shri Amit Kapur, learned counsel on behalf of the firstrespondent drew our attention to Entry 78 of notification No. 21/02 datedB1.3.2002. Entry 78 reads as follows:

C

(137) Shri Ramchandran, learned senior counsel, would point outthat the said Entry relates to inputs for power generation. The case ofthe first respondent is also that Entry 399 actually specifically deals withthe goods required for coal mining project under which the first respondentDhas been visited with customs duty.

(138) The argument of Shri Amit Kapur is that first of all, Entry78 if contrasted with Entry 400 would show that all goods needed for apower project understood in a larger sense as including a captive coalmine would also come within four walls of Entry 400.

E

(139) Shri Amit Kapur, learned counsel, would point out that captivecoal mine envisaged as such is one where the entire production of coalis to be utilised for the power plant in question which also would indicatethat it is part of the power project. It is not in dispute that whatever maybe the distinction which may exist between a mega power project, anFultra mega power project (we are concerned with latter), there is noseparate notification under the Customs Act which deals with ultra megapower project.

(140) The upshot of the above discussion is that we are of theview that the first respondent has not been able to demonstrate thatGthere was a change in law as contemplated in Article 13.1.1 by issuanceof the OM dated 17.06.2011.

RELIEF

(141) The three procurers who were respondents before theHTribunal have not chosen to file appearance before this Court. The lead procurer has filed an appeal before this Court. Further, there is only onePPA. Ironically, decisions relating to Order XLI Rule 21 and Rule 33have been placed before this Court by the first respondent remindingthis Court of the power available to it. No doubt, they placed this positionin an attempt at salvaging the situation arising from no appeal have beenfiled by it challenging the finding relating to there being no change in lawin regard to the water intake system.

(142) In the facts of this case, we also notice that the three non-filing parties are respondents in the appeals filed by the appellants. Wealso cannot be unmindful of the argument of Shri P. Chidambaram andothers that if the first respondent had a case that they were entitled to anexemption under the situation extant prior to the cut off date then properremedy would be to seek refund on the basis that they have been illegallyvisited with customs duty.

(143) In the facts of this case, we feel that the interest of justicedo require that the impugned order be set aside not only as against theappellants but also as against the three non-appellants. In the nature ofthe litigation, we would think that the benefit of this order should bevouchsafed to the three respondents also, viz., (1) respondent No.12(BSES Rajdhani Power Limited); (2) respondent No. 13 (BSESYamuna Power Limited); and (3) respondent No. 15(Uttarakhand PowerCorporation Limited). Apparently, these respondents have not contestedthe appeals.

(144) As we have noticed in the beginning as a sequel to theimpugned order, the Commission has passed orders allowing the claimrelating to the water intake system whereas it has rejected the prayerrelating to change in law flowing from OM dated 17.06.2011. The affectedparties have carried the matter to the Tribunal in appeals. It is brought toour notice that this Court passed an order of stay dated 25.11.2019.Since the appellants have challenged the order of the Tribunal, thesubsequent order by the Commission can only be treated as aconsequential order and therefore, it may not have any independent legsto stand on. The appellants must be given the fruits of the decision whichultimately is rendered in their favour, as we are rendering this judgment.

(145) Accordingly, the appeals are allowed. The impugned orderis set aside. The order will enure to the benefit also of the threerespondents also, viz., (1) respondent No. 12(BSES Rajdhani Power AB

C

D

E

F

G

H

ALimited); (2) respondent No. 13 (BSES Yamuna Power Limited); and(3) respondent No. 15(Uttrakhand Power Corporation Limited). Equally,the order passed by the Commission consequent upon the remand underthe impugned order cannot survive. The appeals filed will also lose theirforce and it is for the appellants to do the needful to bring it to an end inthe light of this judgment.B

The parties will suffer their own costs.

C

Bibhuti Bhushan Bose(Assisted by : Rahul Rathi, LCRA)

Appeals allowed.

D

E

F

G

H