In a significant legal twist, the Himachal Pradesh High Court has nullified an earlier directive requiring the state government to return ₹280 crore to Adani Power Limited concerning two hydro-electric projects.
The court’s division bench, comprising Justice Vivek Singh Thakur and Justice Bipin Chander Negi, found that Brakel Corporation, the initial highest bidder for the projects in 2006, had secured the award through misrepresentation and suppression of facts. Consequently, Brakel or any successor, including Adani, could not claim the refund.
“Brakel itself was not entitled to a refund, and therefore, could not transfer any right to Adani for recovery from the State,” the court ruled.
Initially, Brakel Corporation won the bid but failed to pay the upfront premium on time, eventually covering the amount with interest through Adani Power’s investment after transferring 49 percent equity to Adani. However, disputes persisted, with Reliance Infrastructure, which had matched Brakel’s bid, also contesting the government’s refusal to cancel Brakel’s allotment.
In 2009, the High Court decreed that Brakel had wrongfully altered its consortium membership without government approval and secured the project through deceit. Continuous litigation ensued, leading the State in 2015 to decide to refund the upfront premium to Brakel without interest, subject to Reliance Infrastructure’s upfront premium payment. By 2016, Reliance withdrew from the project.
The State retracted its refund decision in 2017, prompting Adani to challenge this in court. Although a single-judge ruled in Adani’s favor, the State’s appeal has now been upheld by the division bench. The court determined that the original cancellation of Brakel’s allotment in 2009 warranted the forfeiture of the upfront premium due to the State’s significant financial losses.
“The Law Department’s opinion that the State couldn’t retain upfront premiums from two bidders is invalid here as the project’s allotment was canceled in 2009 due to Brakel’s misrepresentation. Additionally, the decision to refund Adani was not final since Reliance had withdrawn, and no upfront premium was collected from them,” the court noted.
The ruling emphasized that Adani, as a diligent investor, should have been aware of the ongoing litigation and complexities surrounding the project.
The court’s decision reverses the single-judge’s earlier ruling and grants the State’s appeal, putting an end to this chapter of the hydro-electric project saga.