Adani Power approached the Supreme Court seeking a refund of Rs.280 crore from the Himachal Pradesh government. The company claims it is owed the amount and has taken the legal route to recover it. The case highlights a financial dispute between the energy giant and the state government, now awaiting the court’s decision.
New Delhi: Adani Power Ltd approached the Supreme Court, seeking a refund of Rs. 280 crore from the Himachal Pradesh government related to the 969-megawatt Jangi Thopan Power Project in Kinnaur district.
A Supreme Court bench consisting of Justices M.M. Sundresh and Aravind Kumar scheduled to hear Adani Power’s petition on Monday.
The company contesting a recent Himachal Pradesh High Court ruling that overturned a previous single-bench order directing the refund of the Rs. 280 crore premium linked to the hydropower project.
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On July 18, a division bench of the high court, comprising Justices Vivek Singh Thakur and Bipin Chandra Negi, dismissed Adani Power’s refund claim following an appeal by the Himachal Pradesh government. This decision provided relief to the state government, which is currently under financial strain, led by Chief Minister Sukhvinder Singh Sukhu.
The dispute dates back to 2005, when Himachal Pradesh invited global bids for two hydropower projects Jangi Thopan and Thopan Powari, each with a capacity of 480 MW. Brakel Corporation NV emerged as the highest bidder.
After Brakel failed to deposit the required upfront premium, Reliance Infrastructure Ltd offered to match the bid, sparking a lengthy legal battle. The state government issued a show-cause notice to Brakel, leading to a deposit of Rs.173.43 crore by the company’s subsidiary. However, Reliance Infra contested this payment, arguing that Brakel missed the deadline.
It was later discovered that Brakel Kinnaur Pvt. Ltd, a subsidiary of Brakel Corp., received Rs. 173.43 crore from the Adani Group to cover the upfront premium for the hydroelectric projects.
On July 7, 2008, the Himachal Pradesh Cabinet issued another show-cause notice to Brakel for misrepresentation and sought to forfeit the upfront payment due to the state’s financial loss. This eventually led to the cancellation of the project’s allotment to Brakel and the forfeiture of the upfront premium.
In a ministerial meeting held on September 4, 2015, the state law department advised that it was not legally permissible for the state to retain upfront premium payments from two different parties for the same project, suggesting that a refund to Adani Power Ltd was necessary.
Adani Power, which was not originally part of the bidding process, sought to recover the upfront premium deposited by Brakel through a writ petition filed in the Himachal Pradesh High Court in 2019. The company requested a refund of Rs.280.06 crore, along with interest, citing payments made on behalf of Brakel Corp. for the two hydro projects in Kinnaur.
Adani Power argued that the state’s failure to address Brakel’s misrepresentation and procedural violations justified their claim for compensation. They invoked Section 70 of the Contract Act, which concerns compensation for non-gratuitous acts, and Section 65, which pertains to restitution when agreements become void.
In April 2022, the High Court’s single-bench order initially ruled in favour of Adani Power, directing the Himachal Pradesh government to refund the amount. However, the division bench later ruled that since the funds were deposited after legal proceedings had commenced, any investments made during this period were at the investor’s risk, and Brakel could not reclaim equity in its favour.
The division bench also stayed the earlier single-bench order, noting that Adani Power’s financial arrangement with Brakel lacked the necessary state government approval. The bench emphasized that Brakel’s misrepresentation, combined with Adani’s awareness of ongoing legal issues, invalidated their right to compensation. It was highlighted that Adani Power’s financial dealings with Brakel were carried out without the required legal and procedural approvals.
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Additionally, the court pointed out that Adani Power attempted to join the consortium through non-transparent means rather than following the legally accepted process. The court concluded that there was no lawful relationship between Adani Power and the state, and since Adani’s investment made during ongoing litigation, they could not claim restitution or compensation from the state.
Ultimately, the High Court overturned the previous judgment, upheld the Himachal Pradesh government’s appeal, dismissed Adani Power’s refund claim, and affirmed the forfeiture of the upfront premium.