Press Release Does Not Qualify as Law

Source: Supreme Court  

Why in News? 

Recently, Chief Justice of India BR Gavai and Justice Augustine George Masih held that government decisions, clarifications, and press releases without legislative or statutory backing do not qualify as a “Change in Law” under Power Purchase Agreements (PPAs), as they are merely administrative instruments and not legally enforceable changes. 

• The Supreme Court held this in the matter of Nabha Power Limited v. Punjab State Power Corporation Limited and Others .(2025). 

What was the Background of Nabha Power Limited v. Punjab State Power Corporation Limited and Others. (2025) Case ? 

• Nabha Power Limited (NPL) and Talwandi Sabo Power Limited (TSPL) were special purpose vehicles created to develop thermal power projects in Punjab through competitive bidding under Power Purchase Agreements with Punjab State Power Corporation Limited (PSPCL). 
• During their 2009 bidding process, both companies factored in fiscal benefits from two government policies: the Mega Power Policy offering customs duty concessions, and the Foreign Trade Policy providing deemed export benefits for capital goods procurement. 
• After winning the bids, a government press release in October 2009 reduced the Mega Power Project threshold from 1,000 MW to 500 MW. However, subsequent clarifications by the Directorate General of Foreign Trade in 2011 withdrew the deemed export benefits for such power projects. 
• The companies claimed this post-bid policy reversal constituted a "Change in Law" under their contracts, entitling them to compensation for increased project costs.  
• The State Electricity Commission and Appellate Tribunal rejected their claims, leading to appeals before the Supreme Court. 

What were the Court’s Observations? 

• The Court observed that press releases are merely administrative announcements without legal force and cannot constitute "Change in Law" under Power Purchase Agreements, as only statutes or notifications published in official gazettes qualify as legal changes. 
• The Court observed that the companies failed to meet essential prerequisites for deemed export benefits, including proving goods were manufactured in India, supplied by contractors, and procured through International Competitive Bidding procedures. 
• The Court found that subsequent government notifications were merely clarificatory rather than introducing new legal provisions, and that legitimate expectations cannot arise from press releases issued by non-parties to contracts. 
• The Court observed that contractual interpretation requires giving words their ordinary meaning and distinguished between general definitions of "law" and specific "Change in Law" requirements under the agreement. 
• The Court noted that the legal definition of "manufacture" requires transformation into new products with distinctive characteristics, concluding that construction activities cannot qualify as manufacturing under trade law. 
• The Court observed the distinction between tariff-based competitive bidding for power procurement and International Competitive Bidding for goods supply, holding these are separate legal requirements. 
• The Court found that parties seeking compensation under "Change in Law" clauses must establish both the occurrence of a qualifying legal change and their entitlement to the underlying benefits being altered. 

What is Press Release? 

• A press release is a statement issued by an individual, institution or organisation for distribution through media channels like newspapers, radio and television. 
• The press release, which is also known as press note or hand-out, provides information about the activities undertaken by the company, institution or organisation. 
• Such information may range from announcements like the appointment of Managing Director; product launches; expansion planned; speeches delivered by ministers and officials; decisions taken by Union or state cabinets. 
• Press releases are merely administrative announcements without legal force and cannot constitute "Change in Law" under Power Purchase Agreements, as only statutes or notifications published in official gazettes qualify as legal changes.   

What is Power Purchase Agreement? 

• About: A long-term contract between energy producers and consumers for electricity sale/purchase, commonly used in renewable energy projects. 
• Purpose: Provides financial security for energy producers by guaranteeing returns on investments while offering buyers predictable energy costs over extended periods (typically 10-20+ years). 
• Key Features: Specifies power price, delivery terms, quality standards, timelines, and penalty clauses, while distributing risks between parties and protecting against market volatility. 
• Types: Physical PPAs (actual energy delivery via grid) and Synthetic/Virtual PPAs (financial arrangements settling price differences without physical delivery). 
• Significance: Essential for independent power projects globally, especially in emerging markets, as they provide the commercial stability needed for large-scale energy infrastructure development.