SC rules in favour of PSPCL, blocks ₹5,000-cr claim by pvt thermal plants
In a relief for Punjab State Power Corporation Limited (PSPCL), the Supreme Court (SC) has ruled in its favour in a high-stakes, decade-long legal battle with private thermal power producers — Nabha Power Limited and Talwandi Sabo Power Limited
Chandigarh: In a relief for Punjab State Power Corporation Limited (PSPCL), the Supreme Court (SC) has ruled in its favour in a high-stakes, decade-long legal battle with private thermal power producers — Nabha Power Limited (NPL) and Talwandi Sabo Power Limited (TSPL). The verdict has saved the PSPCL and Punjab power consumers from a financial liability of nearly ₹5,000 crore, claimed by the independent power producers (IPPs) under the guise of fiscal incentives.
The judgment was pronounced on August 19 by the division bench comprising chief justice of India BR Gavai and justice AG Masih.
The case revolved around the eligibility of the two private thermal power plants for “deemed export benefits” under the Foreign Trade Policy (FTP) 2009–2014. The Directorate General of Foreign Trade (DGFT) had withdrawn these benefits post-bid, prompting the IPPs to seek compensation, citing a “change in law” under the terms of their power purchase agreements (PPAs) with the PSPCL.
However, the apex court dismissed the appeals filed by the IPPs, upholding earlier decisions by the Punjab State Electricity Regulatory Commission and the Appellate Tribunal for Electricity (APTEL).
Claims rejected,
deductions upheld
The Nabha Power Limited had claimed benefits worth ₹463.11 crore, with total compensation sought over the PPA tenure amounting to ₹1,980 crore. The Talwandi Sabo Power Limited had also claimed ₹995 crore in benefits, seeking ₹3,480 crore over the PPA term.
The PSPCL, however, had consistently refused to pass these benefits, maintaining a deduction of approximately 10 paise per unit — a move now validated by the apex court.
{{/usCountry}}The PSPCL, however, had consistently refused to pass these benefits, maintaining a deduction of approximately 10 paise per unit — a move now validated by the apex court.
{{/usCountry}}The Supreme Court concurred with the Appellate Tribunal for Electricity’s finding that the Foreign Trade Policy benefits were meant for tangible and movable goods, not for immovable assets like in-situ thermal power plants. It ruled that such infrastructure does not qualify as “goods” under the Foreign Trade Policy and, therefore, was never eligible for the benefits in question.
{{/usCountry}}The Supreme Court concurred with the Appellate Tribunal for Electricity’s finding that the Foreign Trade Policy benefits were meant for tangible and movable goods, not for immovable assets like in-situ thermal power plants. It ruled that such infrastructure does not qualify as “goods” under the Foreign Trade Policy and, therefore, was never eligible for the benefits in question.
{{/usCountry}}On the “change in law” argument, the court clarified that the clause in the PPA referred only to statutory or legislative changes, not to administrative actions like the DGFT’s public notices. As such, the withdrawal of Foreign Trade Policy benefits did not qualify for compensation under the PPA.
{{/usCountry}}On the “change in law” argument, the court clarified that the clause in the PPA referred only to statutory or legislative changes, not to administrative actions like the DGFT’s public notices. As such, the withdrawal of Foreign Trade Policy benefits did not qualify for compensation under the PPA.
{{/usCountry}}PSPCL hails judgment
PSPCL officials described the verdict as a landmark win, preventing a massive financial burden on the power utility and its consumers.
“This is a major victory. Had the case gone the other way, the power corporation — and ultimately, the public — would have faced an unnecessary financial burden,” said a senior PSPCL engineer closely associated with the legal proceedings.
He credited former PSPCL chairman-cum-managing director Baldev Singh Sran for his proactive involvement in the case, noting that his persistent follow-up played a key role in securing the favourable outcome.
The PSPCL has previously lost several cases involving lopsided PPAs, including disputes over coal washing charges and fixed charges. However, this verdict marks a turning point, reinforcing PSPCL’s position in power procurement matters.
