A bench of Justices M.M. Sundresh and Aravind Kumar sought a response from the Himachal Pradesh Government on the matter.
![[Breaking] Hydro-Electric Project Dispute: Adani Power Seeks Rs 280 Crore Refund from the Himachal Pradesh Govt.| Apex Court Issued Notice](https://i0.wp.com/lawchakra.in/wp-content/uploads/2024/09/image-2024-09-02T114149.437.png?resize=820%2C490&ssl=1)
NEW DELHI: Today (2nd Sept): The Supreme Court issued a notice regarding Adani Power’s plea for a Rs 280 crore refund from the Himachal Pradesh Government concerning the 969-megawatt Jangi Thopan Power Project in Kinnaur district.
A bench of Justices M.M. Sundresh and Aravind Kumar sought a response from the Himachal Pradesh Government on the matter.
On July 18, a division bench of the High Court, comprising Justices Vivek Singh Thakur and Bipin Chandra Negi, dismissed Adani Power’s claim for a Rs280 crore refund, following a challenge by the Himachal Pradesh Government. This decision provided relief to the financially strained state government, led by Chief Minister Sukhvinder Singh Sukhu.
Involvement of Adani Power
In 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, but after failing to deposit the required upfront premium.
The state government issued a show-cause notice to Brakel, prompting its subsidiary to deposit Rs 173.43 crore. However, Reliance Infrastructure Ltd, which had offered to match Brakel’s bid, opposed this payment, arguing that Brakel had missed the deadline.
Subsequently, it was revealed that Brakel Kinnaur Pvt. Ltd, a subsidiary of Brakel Corp., had received Rs 173.43 crore from the Adani Group to cover the upfront premium for the hydropower projects.
On July 7, 2008, the Himachal Pradesh Cabinet issued a show-cause notice to Brakel for misrepresentation, seeking forfeiture of the upfront payment due to the state’s losses. This action resulted in the cancellation of Brakel’s project allotment and the forfeiture of the premium.
During a ministerial meeting on September 4, 2015, the state law department advised that the state could not retain upfront premiums from two different parties for the same project, suggesting that a refund to Adani Power Ltd was necessary.
Although Adani Power was not initially involved in the bidding process, the company sought to recover the upfront premium deposited by Brakel by filing a writ petition in the Himachal Pradesh High Court in 2019.
Adani Power requested a refund of Rs 280.06 crore, plus interest, citing payments made on behalf of Brakel Corp. for the two hydro projects in Kinnaur.
Adani Power contended that the state’s failure to address Brakel’s misrepresentation and procedural violations warranted their claim for compensation.
They cited Section 70 of the Contract Act, which concerns compensation for non-gratuitous acts, and Section 65, which addresses restitution when agreements become void.
In April 2022, a single bench of the High Court initially ruled in favor of Adani Power, directing the Himachal Pradesh government to refund the amount.
Found No Lawful Relationship Between Adani Power and the state
The High Court’s division bench ruled that since the amount in question was deposited after legal proceedings begun, any investment made during this period was at the investor’s own risk. As a result, Brakel could not reclaim equity.
The division bench, while suspending the earlier single-bench order, noted that Adani Power’s financial arrangement with Brakel lacked the necessary approval from the state government.
It also highlighted that Brakel’s misrepresentation and procedural errors, combined with Adani’s awareness of ongoing legal issues, invalidated their claim for compensation.
Adani Power’s financial dealings with Brakel were conducted without proper legal and procedural approvals.
The court further noted that Adani Power attempted to join the consortium in a non-transparent manner, rather than through the legally accepted process.
It concluded that no lawful relationship existed between Adani Power and the state, and since Adani’s investment was made during ongoing litigation, they could not claim restitution or compensation.
Ultimately, the High Court set aside the previous judgment, upheld the Himachal Pradesh government’s appeal, rejected Adani Power’s refund claim, and confirmed the forfeiture of the upfront premium.
