Adani Power Takes ₹280 Crore Refund Battle to Supreme Court Over Himachal Pradesh Hydropower Project

Adani Power Ltd has taken its case to the Supreme Court, requesting a refund of ₹280 crore from the Himachal Pradesh government. The issue revolves around the 969-megawatt Jangi Thopan Power Project located in the Kinnaur district.

A Supreme Court bench, which includes Justices M.M. Sundresh and Aravind Kumar, is scheduled to hear Adani Power’s plea on Monday. The company is challenging a recent decision by the Himachal Pradesh High Court, which overturned an earlier ruling that had directed the government to refund the ₹280 crore premium related to the hydropower project.

Timeline and Key Events

The conflict began back in 2005, when the Himachal Pradesh government 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 at the time.

However, Brakel failed to pay the required upfront premium, leading Reliance Infrastructure Ltd to offer to match Brakel’s bid. This sparked a lengthy legal battle.

The state government issued a show-cause notice to Brakel, which prompted Brakel’s subsidiary to deposit ₹173.43 crore. Reliance Infra opposed this payment, arguing that Brakel had missed the deadline.

Adani Power’s Involvement

It was later discovered that Brakel Kinnaur Pvt. Ltd, a subsidiary of Brakel Corp., had received ₹173.43 crore from the Adani Group to cover the upfront premium for the hydroelectric projects.

On 7 July 2008, the Himachal Pradesh Cabinet issued another show-cause notice to Brakel for misrepresentation, seeking to forfeit the upfront payment due to the state’s financial loss. This resulted in the cancellation of Brakel’s project allotment and the forfeiture of the upfront premium.

In a ministerial meeting on 4 September 2015, the state’s law department advised that the government could not keep upfront premium payments from two different parties for the same project. They suggested that a refund to Adani Power Ltd might be necessary.

Although Adani Power was not originally part of the bidding process, it sought to recover the upfront premium paid on behalf of Brakel by filing a writ petition in the Himachal Pradesh High Court in 2019. The company sought a refund of ₹280.06 crore, plus interest, citing the payments made 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 cited Section 70 of the Contract Act, which deals with compensation for non-gratuitous acts, and Section 65, which pertains to restitution when agreements become void.

High Court Rulings

Initially, a single bench of the Himachal Pradesh High Court sided with Adani Power in April 2022, directing the state government to refund the amount.

However, the High Court’s division bench later overturned this decision. The bench, which included Justices Vivek Singh Thakur and Bipin Chandra Negi, ruled that because the amount was deposited after legal proceedings had begun, any investment made during this period was at the investor’s risk. As a result, Brakel could not reclaim equity in its favor.

The division bench emphasized that Adani Power’s financial arrangement with Brakel lacked the required approval from the state government. Additionally, the bench noted that Brakel’s misrepresentation and procedural errors, combined with Adani Power’s awareness of the ongoing legal issues, negated their right to compensation. Adani Power’s financial dealings with Brakel were conducted without the necessary legal and procedural approvals.

The court also pointed out that Adani Power attempted to join the project in a non-transparent manner, rather than following the proper legal process. It concluded that no lawful relationship existed between Adani Power and the state, and since Adani’s investment was made during ongoing litigation, it could not claim restitution or compensation from the government.

Ultimately, the High Court overturned the previous judgment, upheld the Himachal Pradesh government’s appeal, and rejected Adani Power’s refund claim, affirming the forfeiture of the upfront premium.