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Informist, Monday, Sep 2, 2024

 

NEW DELHI - The Supreme Court today issued notice to the Himachal Pradesh government on Adani Power Ltd's plea seeking a refund of 2.81 bln rupees from the state in a matter related to two hydroelectric projects. Adani Power had moved the apex court against the Himachal Pradesh High Court's order to deny them refund.

 

In 2005, the state government had issued advertisements regarding two hydropower projects--Jangi Thopan and Thopan Powari. A 

letter of intent was issued in favour of Brakel Corp that had emerged the highest bidder. Brakel Corp was directed to sign the pre-implementation agreement and deposit the upfront premium. Adani Power, with the objective to enter hydropower operations, had made an initial investment of 1.73 bln rupees in Brakel Kinnaur Power Pvt Ltd, the Indian subsidiary of Brakel Corp.

 

In 2008, the state government issued a show cause notice to Brakel Corp asking it why allotment of the two hydroelectric projects not be cancelled on account of non-deposit of upfront premium. Thereafter, Brakel Kinnaur deposited a sum of 1.73 bln rupees with the state government.

 

The Himachal Pradesh government conducted enquiries into the source of funds of Brakel Kinnaur Power. Through a letter, Brakel Kinnaur informed the state's power department that it had agreed to transfer 49% equity in the project to Adani Power. Consequently, the Himachal Pradesh Cabinet gave a show cause notice to Brakel Corp and its Indian subsidiary as to why the allotment made in their favour not be cancelled on account of alleged misrepresentation.

 

The Cabinet said Brakel misrepresented to the state government about their incorporation and equity participation of other members of their consortium. The Cabinet alleged that Brakel Kinnaur transferred 49% equity to Adani Power without taking their prior approval, and that there was a delay in payment of upfront premium.

 

Following this, a high-powered committee was formed by the state which ruled in favour of Brakel. Acting on the committee's recommendation, the state government decided not to cancel the allotment of projects to Brakel. However, challenging this decision, Reliance Industries Ltd, another bidder in the project, moved the high court. In 2009, the court quashed the government's decision and said delayed upfront premium payments cannot be accepted.

 

In 2013, Brakel requested the government to refund the upfront premium of 2.81 bln rupees with interest to Adani Power. In 2015, the state government approved the refund of the amount to Adani Power. Thereafter, the project was offered to Sutlej Jal Vidyut Nigam Ltd, NHPC Ltd and NTPC Ltd.

 

In 2017, the state government informed Adani Power that due to "various legal intricacies and contractual complications involved in the matter", Council of Ministers has reviewed its decision taken in its earlier meeting and has decided to withdraw its decision of refund. Challenging this, Adani Power moved the single bench of the high court, which ruled in its favour. However, a division bench of the court rejected the single bench's order and refused a refund to Adani. 

 

At 1322 IST, shares of Adani Power were up nearly 2% at 644 rupees on the National Stock Exchange.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Surya Tripathi

Edited by Vandana Hingorani

 

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