2024 Supreme(SC) 987

SUPREME COURT OF INDIA
B.R. Gavai, Prashant Kumar Mishra, K.V. Viswanathan, JJ.
Nabha Power Limited & Anr. – Appellants
Versus
Punjab State Power Coroporation Limited & Anr. – Respondents
Civil Appeal No. 8478 of 2014
Decided On : 05-11-2024

IMPORTANT POINTS
(1) Interpretation of Contract – Business Efficacy Test – Any invocation of business efficacy test would arise only if terms of contract are not explicit and clear – Business Efficacy Test cannot contradict any express term of contract.
(2) A right vests when all facts have occurred which must by law occur in order for person in question to have the right – It is only when right vests will there be a correlative duty on other as far as nature of right involved in present case is concerned – Certainty is hallmark of law – It is one of its essential attributes.

Headnote:

(A) Interpretation of Contract – Business Efficacy Test – Golden rule of interpretation is that words of a contract should be construed in their grammatical and ordinary sense, except to the extent that some modification is necessary in order to avoid absurdity, inconsistency or repugnancy – Any invocation of business efficacy test as canvassed would arise only if terms of contract are not explicit and clear – Business Efficacy Test cannot contradict any express term of contract and is invoked only if by a plain and literal interpretation of term in agreement or contract, it is not possible to achieve result or consequence intended by parties acting as prudent businessmen. (Para 41)

(B) Customs Act, 1962 – Section 25 – Mega Power Policy, 2006 – Modifications – Clauses in RFP obligate bidder to satisfy itself about extant legal regime and those clauses cannot operate as a crutch to elevate press release of 01.10.2009 to the status of law under Clause 1.1. of the PPA – Press release summarizing Cabinet decision and beset with several conditions created no vested rights on any party to power purchase agreement vis-à-vis other party on 01.10.2009 – Press release itself contemplated certain contingencies – A right vests when all facts have occurred which must by law occur in order for person in question to have the right – It is only when right vests will there be a correlative duty on other as far as nature of right involved in present case is concerned – Certainty is hallmark of law – It is one of its essential attributes – It is an integral component of rule of law – What was certain on 01.10.2009 in context of present case was only prevalent customs notification of 01.03.2002 issued under Section 25, duly notified and gazetted as well as Mega Power Policy document promulgated on 07.08.2006 – Press release of 01.10.2009 on the facts herein could not have been the basis for appellant to assume that a new legal regime had commenced in with effect from that date – Press release did not alter/amend/repeal existing law as on 01.10.2009 – It was at best announcement of a proposal approved by Cabinet which had to be given shape after fulfilment of conditions mentioned therein – No reason to interfere with concurrent judgments of courts below. (Paras 55, 58, 59, 63, 70 and 73)

Facts of the case:

Present appeal arises from the judgment dated 30.06.2014 of Appellate Tribunal for Electricity in Appeal No. 29 of 2013. By said judgement, APTEL dismissed the appeal of appellant and confirmed order dated 12.11.2012 of Punjab State Electricity Regulatory Commission , insofar as issue no. 1 discussed therein was concerned. That issue concerned the aspect of Mega Power Policy and the effect of the Press Release of 01.10.2009.

Question that arises for consideration is: Whether press release of 01.10.2009 announcing decision of Union Cabinet about approval of certain modifications envisaged in then existing mega power policy, is covered within meaning of expression “law as defined in Clause 1.1 of RFP/PPA and if so did extant legal regime as on 01.10.2009 undergo a change from said date”?

Findings of Court:

There is only one voice of the government which has given customs duty exemption for goods imported for use in thermal power plants, (without requirement of plant being an interstate power plant) with effect from 11.12.2009. Policy document also came on 14.12.2009. Press release of 01.10.2009 could not have been the basis for the appellant to have assumed that notification of 01.03.2002 would stand amended and they would have benefit from 01.10.2009 itself.

Result : Civil Appeal dismissed.