Cuttack, Oct 1 The Orissa High Court on Thursday dismissed a petition filed by Vedanta Ltd seeking restoration of the earlier pricing mechanism for bauxite supplied by state-owned Odisha Mining Corporation (OMC) to its alumina refinery at Lanjigarh in Kalahandi district.
A division bench comprising Chief Justice Harish Tandon and Justice M S Raman held that Vedanta could not seek revival or indirect enforcement of agreements that had already been terminated.
"While dismissing the writ petition having found no merit, the interim orders passed in the matter stand vacated. The opposite parties (including OMC) are at liberty to take follow-up action in accordance with law," the court said in its judgment.
The dispute between Vedanta and OMC relates to the supply of bauxite to the company's Lanjigarh refinery.
Vedanta had contended that it made substantial investments in the state based on assurances of long-term bauxite availability and a stable pricing mechanism.
The company also operates an aluminium smelter and captive power plants at Jharsuguda.
The company had entered into agreements with OMC, including an October 2004 arrangement for supply of 150 million tonnes of bauxite at a price linked to the cost of production plus 50 per cent royalty.
Subsequently, under the 2018 Long Term Linkage (LTL) Policy, 70 per cent of saleable mineral stock was earmarked for end-user industries and the remaining 30 per cent for national e-auction. Vedanta and OMC thereafter entered into LTL sale agreements.
Vedanta argued that OMC subsequently altered the pricing mechanism following the 2019 amendment to Rule 45 of the Mineral Concession Rules, contending that the amended provision applied to mine block auctions and not commercial sales.
After OMC rejected its representation seeking restoration of the earlier pricing formula, Vedanta approached the High Court.
Arguing on behalf of the state, advocate general Pitambar Acharya noted that the writ petition, so far as it relates to the amended prayer seeking supply of 150 Million Tonnes of Bauxite at the pricing mechanism contemplated under the Joint Venture Agreements dated 05.10.2004 and 18.02.2009 read with the MoUs dated 07.06.2003 and 04.04.2007, is wholly misconceived, hopelessly barred by delay, laches, waiver and acquiescence and, therefore, liable to be dismissed.
Acharya said the original MoU dated 07.06.2003 stood superseded upon execution of the subsequent MoU dated 04.04.2007.
The said MoU dated 04.04.2007 itself was valid only for a period of two years, till 03.04.2009, and admittedly no extension thereof was ever granted by the state government.
The MoUs, being non-statutory in nature, cannot be specifically enforced after lapse of more than sixteen years, he argued.
He noted that after termination of the Joint Venture Agreements, Vedanta accepted and acted upon the LTL (long term linkage) regime framed by the state government.
The termination letter dated 29/30.09.2015 itself assured supply of bauxite under the prevailing Long Term Linkage Policy.
This apart, the company also participated in the process initiated under the amended LTL Policy dated 24.02.2018, submitted an offer pursuant to Expression of Interest dated 08.03.2018 and thereafter voluntarily executed LTL Sales Agreements dated 20.04.2018 and 16.05.2023.
Presently, supplies are being effected under the subsisting LTL Sales Agreement dated 16.05.2023 valid till 15.05.2028.
"Thus, the conduct of the petitioner unequivocally establishes acceptance of the post-amendment of the MMDR Act in 2015 and, thereby, it abandoned the right flowing from the terminated Joint Venture Agreements.
The court noted that the original joint venture arrangement between OMC and Vedanta was terminated in September 2015 after amendments to Mines and Minerals (Development and Regulation) Act changed the legal framework governing mining operations and govt-company joint ventures.
The termination was never challenged by Vedanta and had attained finality, the bench observed.
The bench further held that under Section 17A of MMDR Act and Rule 45 of the Minerals (Other than Atomic and Hydro Carbons Energy Minerals) Concession Rules, 2016, the OMC was justified in determining the pricing mechanism and raising demands accordingly.
