Doctrine of Movability Reaffirmed: Power-Plant Assets Are Not “Goods” & Press Releases Are Not “Change in Law” – Supreme Court Commentary on Nabha Power Ltd. v. Punjab State Power Corporation Ltd. (2025 INSC 1002)

1. Introduction

The Supreme Court’s decision in Nabha Power Ltd. v. Punjab State Power Corporation Ltd. (“Nabha II”) settles two recurring controversies that have plagued electricity developers and procurers since tariff-based competitive bidding became the norm under Section 63 of the Electricity Act 2003:

Whether the withdrawal of fiscal incentives post-bid submission constitutes a “Change in Law” under standard Power Purchase Agreements (PPAs); and
Whether deemed-export concessions under Paragraph 8.3 of the Foreign Trade Policy (FTP) 2009-2014 extend to capital-intensive power projects.

The Court dismissed back-to-back appeals filed by Nabha Power Ltd. (NPL) and Talwandi Sabo Power Ltd. (TSPL) against the adverse findings of the Appellate Tribunal for Electricity (APTEL). In doing so, it reaffirmed the orthodox view that:

a coal-fired power station assembled in-situ is an immovable property and hence not “goods”;
a DGFT public notice or cabinet press release, unlike a notified statutory rule, does not qualify as “law” and consequently its supersession cannot trigger compensation under Article 13 of the Model PPA; and
developers who structure their bids on the assumption of uncertain fiscal incentives bear the contractual and commercial risk when those assumptions do not materialise.

2. Summary of the Judgment

The Court (B. R. Gavai, C.J. and Augustine George Masih, J.) framed three legal questions:

Were deemed-export benefits under FTP 2009-14 legally available to the appellants on the bid cut-off date (02-10-2009)?
Do the DGFT public notices of April 2011 or the cabinet press release of 01-10-2009 constitute a “Change in Law” under Article 13 of the PPA?
If yes, are the appellants entitled to restitutionary compensation?

All three were decided against the developers, with the Court holding that:

A power-generation plant is an immovable asset and, therefore, not “goods” capable of “supply”; the five cumulative conditions for Paragraph 8 deemed-export benefits were not satisfied.
Neither the cabinet press release (01-10-2009) nor the DGFT public notices (27-04-2011 & 28-04-2011) qualify as a “Change in Law” because they are administrative/clarificatory in nature and were not notified in the Official Gazette as subordinate legislation.
The developers consequently have no claim for tariff adjustment or compensation; the risk of fiscal-policy fluctuation lay squarely with them.

3. Analysis

3.1 Precedents Cited & Their Influence

Delhi Cloth & General Mills (1962): Formulated the “distinctive name, character or use” & marketability test for ‘manufacture’. Adopted to reject the classification of a power plant as “manufactured goods”.
Quality Steel Tubes (1995) & Ambalal Sarabhai (1989): Reiterated that ‘excisable goods’ must be movable and marketable; used to buttress the immovability of a thermal plant.
Nabha Power Ltd. v. PSPCL (2018 & 2025) (“Nabha I” and “Nabha III”): Earlier iterations where the Court had already ruled that a cabinet press release is not law. Adopted stare decisis to dispose of the same argument here.
Sasan Power (2024 SCC): Confirmed that benefit-withdrawal post-bid cannot be presumed to be Change in Law; cited to emphasise due-diligence obligation on bidders.
GMR Warora (2023) & other CERC jurisprudence on Change-in-Law: distinguished, because those cases concerned statutory notifications altering customs duty, not mere DGFT clarifications.

3.2 Core Legal Reasoning

a) “Goods” versus Immovable Property

The FTP does not define “goods”, but para 8 benefits explicitly attach only to “goods … supplied” that are “manufactured in India”. Relying on Sale-of-Goods, Excise & Sales-Tax precedents, the Court held:

Goods must be moveable, capable of being bought & sold, and transmitted. A 1400 MW plant pouring concrete foundations into the earth fails the movability test.

Therefore, turbines/boilers may be individual goods, but the integrated power-station is not. Because the appellants attempted to claim benefits on the full plant (or on post-import assembly) the eligibility criteria collapsed.

b) The Five FTP Preconditions

Movable goods – failed.
Manufactured in India – imported components assembled locally do not amount to “manufacture” of the plant as a singular product.
Supply – self-use of a plant is not a “supply” to a project; you cannot “supply” to yourself.
Main/Sub-contractor Route – not satisfied because EPC affiliates were intra-group and no separate “supply invoice” adduced.
International Competitive Bidding (ICB) – tariffs may have been discovered competitively, but ICB for equipment procurement was not demonstrated; hence the specific trigger in para 8.4.4(iv) was unmet.

c) Meaning of “Change in Law” in Article 13 PPA

The clause covers an “enactment, promulgation, amendment, modification or repeal of any Law”.
“Law” is defined (Article 1.1) to mean statutes, regulations, rules & duly notified orders. A press release or departmental circular is not within that taxonomy.
Accordingly, the cabinet press release (01-10-2009) lowering the Mega-Power threshold or the DGFT Policy Interpretation Committee minutes were merely policy communications, not law. Even if they altered expectations, they do not alter legal rights.
The duty-cut notifications (11 & 14 Dec 2009) that were published appeared after the bid cut-off date, hence their benefits were to be passed to the procurer under the PPA anyway (seller’s affidavit of 23-05-2011).

d) Procedural Default

Article 13.3 obliges a generator to issue prompt written notice and detailed quantification of impact. The Court upheld APTEL’s finding that NPL/TSPL never gave statutory confirmation of eligibility nor timely cost data; hence the claim failed on procedural as well as substantive grounds.

3.3 Anticipated Impact

Risk Allocation Clarity: Developers can no longer bank on uncertain fiscal incentives unless they are explicitly recognised in bid documents or formally notified before the statutory cut-off date.
Regulatory Guidance: SERCs & APTEL now have a Supreme Court blueprint for testing Change-in-Law claims: (i) identify legal instrument; (ii) ascertain its enforceability; (iii) verify notice & quantification compliance.
Bidding Discipline: Financial models must exclude speculative benefits. Lenders may insist on stronger sensitivity analyses or sponsor undertakings.
FTP Interpretation: Cementing the “movability” doctrine ensures that large infrastructure projects (metro rails, refineries, nuclear plants) cannot invoke para-8 deemed-export benefits simply by disaggregating their BoQ.
Executive Action v. Legislation: The judgment draws a bright line – only notified instruments attract contractual compensation. This principle may spill over to highway concessions, PPPs and renewable PPAs.

4. Complex Concepts Simplified

Deemed Export: A fiction under FTP where supplies made within India are treated like exports, thereby refunding duties/taxes to promote domestic manufacturing.
International Competitive Bidding (ICB): A procurement route inviting bids from international vendors, usually mandatory for World-Bank / JBIC funded projects to ensure global price discovery.
Mega Power Policy (MPP): A fiscal package granting zero/import-duty and tax breaks to large (>500 MW) projects notified by Ministry of Power; separate from the FTP scheme.
Press Release vs. Notification: A press release announces intent; a “notification” is a legal instrument published in the Official Gazette with binding force.
Change in Law Clause: A risk-allocation device that adjusts tariff if legal (not merely economic) conditions change post-bid, preserving the “economic equilibrium”.
Movable vs. Immovable: Movable goods can be shifted without structural damage (e.g., a transformer skid); immovable property (e.g., an embedded boiler) cannot – hence no excise duty or deemed-export benefit.

5. Conclusion

The Supreme Court’s ruling in Nabha Power Ltd. v. PSPCL is a decisive restatement of two cardinal principles: first, an integrated power plant is an immovable entity and thus falls outside the ambit of “goods” for the purpose of fiscal incentives designed for merchandise; second, only a duly notified legislative act qualifies as “law” capable of triggering contractual adjustments under a Change-in-Law clause.

By denying compensation, the Court has placed commercial prudence back on developers, instructing them to verify – not presume – the availability of policy incentives. Future PPAs, especially those in the renewable and hybrid domains, must now account for this precedent, either by expressly incorporating policy benefits into bid parameters or by pricing in the risk of their withdrawal. Regulators too have been furnished with a methodical roadmap for interrogating Change-in-Law petitions.

In sum, the judgment is a landmark authority on the interplay between trade policy, fiscal concessions, and electricity-sector contracts, and will act as a bulwark against opportunistic claims founded on executive communications rather than enforceable law.

Doctrine of Movability Reaffirmed: Power-Plant Assets Are Not ‘Goods’ & Press Releases Are Not “Change in Law” – A Comment on Nabha Power Ltd. v. PSPCL (2025 INSC 1002)