Utpadan Nigam loses case, to pay 740 crore compensation to Adani
Jaipur:
Rajasthan High Court
recently dismissed an appeal filed by Rajasthan Vidyut Utpadan Nigam Ltd (RVUNL) against the demand of Rs 740 crore compensation cess on coal rejects by Parsa Kante Collieries Ltd (PKCL), which earlier received favourable orders from an arbitral tribunal and a commercial court.
PKCL, a joint venture between
Adani Enterprises
Ltd (74%) and RVUNL (26%), was formed to mine coal from Rajasthan's blocks in Chhattisgarh, allotted by the Centre. In 2010, the central govt levied a clean energy cess (CEC) on coal, which RVUNL was paying as per the conditions in the Coal Mining and Development Agreement (CMDA).
However, a dispute between PKCL and RVUNL arose after the introduction of GST in 2017, wherein the CEC was replaced by a compensation cess.
"This issue arose between the parties in 2017, wherein RVUNL was in dispute with PKCL. But PKCL was awarded Rs 740 crore by the Arbitral Tribunal, which was upheld by the Rajasthan High Court," said Nilava Bandyopadhyay, senior partner, S&A Law Offices.
Upholding the contention of the Adani company, the arbitrator said RVUNL is liable to reimburse compensation cess to them on the entire coal mined.
The objections filed by the RVUNL under Section 34 of the Arbitration and Conciliation Act were rejected by the commercial court, which held that the view taken by the arbitrator was a plausible one.
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Following this, the RVUNL approached the high court.
While dismissing RVUNL's appeal, the high court bench held, "The argument that reimbursable shall include only those taxes for which the Nigam has a statutory liability to pay has a lacuna." The bench observed that the conclusion of the arbitrator is based upon a reasonable construction of the terms of CMDA and is plausible.
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