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Electricity & Energy LawSupreme Court of India

Nabha Power Limited v. Punjab State Power Corporation Limited

Civil Appeal · 2025 INSC 1002Decided 19 Aug 2025
Civil Appeal No. 8694 of 2017, with Civil Appeal No. 8739 of 2017
Chief Justice of India B.R. Gavai · Justice Augustine George Masih

Background

Nabha Power Limited (NPL) and Talwandi Sabo Power Limited (TSPL), special purpose vehicles set up to build coal thermal power projects in Punjab through competitive bidding, had Power Purchase Agreements with Punjab State Power Corporation Limited (PSPCL). Both claimed that changes to "deemed export" fiscal incentives under the Foreign Trade Policy, introduced through notifications by the Directorate General of Foreign Trade and a Cabinet decision after their bids were submitted, amounted to a "Change in Law" event under their PPAs entitling them to compensation. The Punjab State Electricity Regulatory Commission rejected their claims, and the Appellate Tribunal for Electricity (APTEL) upheld that rejection in a common judgment, prompting both companies to appeal to the Supreme Court.

Decision Breakdown

The Supreme Court held that the notifications the appellants relied on were merely clarificatory in nature and did not change or introduce any new legal position: no prior interpretation of law had ever entitled such developers to import goods for assembly into a power plant and simultaneously claim deemed export benefits on those imports. The Court further reasoned that even assuming, hypothetically, that the notifications did constitute a "Change in Law," the appellants were never entitled to the deemed export benefits in the first place because they had not met the underlying eligibility prerequisites, making the "Change in Law" argument academic and irrelevant to the outcome. Since the first two issues failed, the claim for restitutionary compensation necessarily failed too, and the Court found no ground to interfere with APTEL's judgment, dismissing both appeals as devoid of merit with no order as to costs.

Lesson Learnt

A party cannot claim compensation for a "change in law" disturbing a benefit it was never actually eligible for in the first place: eligibility for the underlying benefit must be established before any change affecting it can be treated as compensable.

Nabha Power Limited v. Punjab State Power Corporation Limited – Legal Case Shots | LegalAware