Adani claim for refund of Rs 280 crore premium: Himachal Pradesh HC overturns order, major relief to Sukhu govt

Himachal Advocate General Anup Kumar Rattan said, “A division bench of the high court today overturned the decision of a single bench. The division bench nullified the single-bench order asking the state government to pay Rs 280 crore premium to Adani Power Ltd within three months. We challenged the single bench order before the division bench, which gave a judgment in favour of the state government today.”

“In its judgment, the division bench also commented that wrong facts were produced before the state government for procuring the project. The judgment says the Adani Group invested in the project through the back door, which was against the terms of the project agreement. Therefore, the premium amount will not be refunded to the Adani Group. The government had signed the project agreement (MOU) with Brakel Company, but the company fraudulently obtained the project with fake documents, which was found to be against the agreement. Subsequently, without the government’s consent, Brakel Company made the Adani Group a member of the project. Thus, Brakel Company is also not entitled to the premium amount,” Rattan further said.

Adani Power Ltd had sought compensation from the state government under sections 65 and 70 of the Indian Contract Act. Meanwhile, the court found that there was no legal relationship between Adani and the State, which is essential for such claims under Section 70.

The court emphasised that Adani’s transaction involving payment to Brakel did not establish grounds for entitlement to compensation from the State. In its judgement, the division bench stated, “For the reasons stated hereinabove, the claim sought to be enforced by Adani against the State on the basis of Section 65 of the Contract Act is rejected.”

Addressing the issue of Brakel Corporation, the court noted that their award was obtained through misrepresentation. The court held that Brakel’s misconduct rendered them “in pari delicto,” meaning equally at fault, which invalidated any claims for restitution under Section 65.

“In the present case, Brakel was in pari delicto… Brakel nor anyone on its behalf could have claimed a refund,” the judgment highlighted.

In 2019, Adani Power filed a writ petition seeking a refund of Rs 280.06 crore, along with interest, citing payments made on behalf of Brakel Corporation concerning two hydro projects in Kinnaur district.

The 960-megawatt hydropower project was awarded to Brakel in 2007, but the company declared itself insolvent and the upfront premium was not deposited. Subsequently, the project was given to the Adani Group. The Adani Group demanded a refund of Rs 280.06 crore, including interest, for the upfront premium. Later, the tender for the project was cancelled.

The Brakel Company had also written the Adani Group to repay the upfront premium in August 2013.

In October 2017, the state government decided not to return Rs 280.06 crore to the Adani Group, which the state cabinet hailed at a meeting.