Supreme Court To Hear Adani Enterprises' Plea For Arbitration Over Coal Block Dispute

The Supreme Court on Friday issued a notice to the Gujarat State Electricity Corp. over a plea by Adani Enterprises Ltd. seeking to invoke arbitration against non-allocation of a coal block in Chhattisgarh.

Appearing for Adani, senior counsel CS Vaidyanathan told the court that the as per the request for proposal document, any dispute arising out of the tender issued for the allocation of the coal block should be referred to arbitration.

It was argued that the Gujarat High Court was in error in refusing to refer the dispute to arbitration.

We have incurred various costs in furtherance of the conditional letter of acceptance. Whether or not we deserve the relief should be decided by the arbitral tribunal, Vaidyanathan said.

It was alleged that the claim is likely to be nearly Rs 100 crore, in light of the costs incurred by the company.

The dispute pertains to an arbitration petition whereby reference to arbitration is sought by Adani Enterprises-led consortium against non-allocation of a coal block in Chhattisgarh by the Gujarat State Electricity Corporation Ltd.

GSECL entered into an agreement with the Ministry of Coal to allocate a coal block in Raigarh district, Chhattisgarh, for coal production and utilisation from the coalmine.

In 2017, an Adani Enterprises-led consortium emerged as the successful bidder for the coal block in a competitive bidding process. The consortium submitted a bank guarantee worth Rs 50 crore as an earnest money deposit.

As a result, the consortium received a conditional letter of acceptance by the GSECL in 2018. Subsequently, however, the GSECL decided to surrender the coal block back to the ministry.

It was the consortium's contention that it had started project-related activities after issuance of the conditional letter of acceptance and has incurred substantial expenses on manpower, infrastructure, administrative expenses, and the like.

The consortium maintained that the GSECL act of unilaterally surrendering the coal block was in violation of the tender process and the conditional letter of acceptance.

Consequently, the consortium invoked the arbitration clause.

The Gujarat High Court, however, refused to refer the matter to arbitration. The court stated that simply awarding the conditional letter of acceptance would not invoke the arbitration clause, as the concerned ministry had not given any approval to proceed with the conditional letter.

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