Vedanta LTD., Mumbai vs. Odisha Mining Corp. LTD., Bbsr

Though many prayers are made in the writ petition as reproduced hereinbefore, the petitioner at the time of hearing of the present matter confined arguments to ―promissory estoppel‖ in order to press for enforcement of the terms of Agreement dated 05.10.2004. Facts:

Facts adumbrated by the petitioner giving rise to filing of this writ petition are narrated herein below.

The present writ petition arises out of a dispute between the petitioner, Vedanta Ltd., and the Odisha Mining Corporation Ltd. (―OMC‖, for brevity), concerning the supply and pricing of bauxite for the petitioner‘s alumina refinery and allied aluminium operations in the State of Odisha. The petitioner is a large industrial undertaking engaged in the business of manufacturing aluminium products and operates an alumina refinery at Lanjigarh, as well as an aluminium smelter and captive power plants at Jharsuguda. The petitioner asserts that it has claimed to have made substantial investments in Odisha over the years and that its industrial establishment was made on the basis of assurance of long term bauxite availability and stable pricing structure.

The petitioner‘s claim is founded on a series of policy commitment and contractual arrangement entered into with the State of Odisha and the OMC. On 07.06.2003, a Memorandum of Understanding was executed between the Government of Odisha and the petitioner‘s predecessor, viz., Sterlite Industries India Ltd., for setting up an alumina refinery complex at Lanjigarh. Thereafter, on 05.10.2004, an agreement was entered into between the OMC and the petitioner, under which the State Government undertook to supply 150 million tonnes of bauxite for the petitioner‘s refinery, and the pricing mechanism was linked to a formula of cost of production plus 50% royalty for bauxite converted into aluminium within the State. The petitioner claims that, relying on the assurance of the State Government as to both the quantity and the pricing of raw material, it invested approximately Rs.1,00,000 crores in Odisha over two decades and developed major industrial facilities that support large-scale direct and indirect employment.

In 2014, the Long Term Linkage Policy (―LTL Policy‖, for convenience) was introduced to provide a mechanism for the supply of minerals, and by Notification, dated 24.02.2018, bauxite was expressly brought within its ambit. Under the Policy of 2018 the State Government provided for a structured regime under which 70% of saleable stock was to be allotted as LTL to the end-user industries, while 30% was to be disposed of through national e-auction. For the e-auction component, the floor price was to be fixed at the cost of production plus 50% profit margin, and this policy created certainty in both the quantity and the pricing. In pursuance of the Policy of 2018, the petitioner-company and the OMC executed a sale agreement on 20.04.2018 for LTL supply of bauxite and the price payable for the LTL quantity was to be derived from the weighted average price discovered in the national e-auction of bauxite. This regime functioned successfully for some time, and that three e-auctions held between April, 2018 and April, 2019 were successful. Nonetheless, the situation got changed in 2019 and post-thereof. The OMC abruptly discontinued the national e-auction process for bauxite in 2019 and later altered the pricing mechanism for LTL supplies. According to the petitioner, this change was introduced midstream while the contractual arrangement between the parties was still in force. Thus, this caused grave prejudice to the petitioner‘s industrial operations.

Complication arose after the Rule 45 of the Minerals (Other than Atomic and Hydro Carbons Energy Minerals) Concession Rules, 2016 got amended by virtue of the Minerals (Other than Atomic and Hydro Carbons Energy Minerals) Concession (Amendment) Rules, 2019 vide G.S.R. 674(E), dated 20.09.2019. The petitioner‘s grievance is that the OMC began to rely on Rule 45 as amended for determining the floor price of bauxite sold through national e-auction. According to the petitioner, Rule 45 applies to mine-block auctions and not to the mercantile sale of bauxite by the OMC under the LTL arrangement. The petitioner relies on the stand of the Central Government that mine-block auctions and commercial sale of minerals are distinct activities, and that Rule 45 is intended for use in the context of mine- block auctions.

On 19.08.2020, the Government of Odisha directed the OMC to implement the mechanism provided under the amendment to Rule 45 for determination of pricing of bauxite in the national e-auction process. This direction materially altered the pre-existing contractual and policy regime and resulted in an enhanced floor price, thereby burdening the petitioner with a substantially higher cost of the raw material. This, according to the petitioner, not only increased its financial burden but also placed it at a disadvantageous position compared with other similarly situated end-user industries. The altered methodology has disrupted the balance of the LTL arrangement and rendered its operations financially unviable.

The petitioner had earlier approached this Court in W.P.(C) No.22397 of 2020 and thereafter in W.P.(C) No.10280 of 2021, challenging the imposition of the revised pricing formula and sought for interim relief(s). In the proceedings that culminated in the order dated 25.01.2023, the parties agreed that the petitioner would submit a comprehensive representation before the OMC, which would be considered by passing a reasoned and speaking order after granting opportunity of hearing. The Court also continued the interim arrangement for a limited period.

In obedience to said order, the petitioner submitted a detailed representation on 08.02.2023, followed by an additional representation on 13.03.2023, wherein and whereby the petitioner set out the historical basis of the bauxite linkage, the investment commitments made by relying upon the assurance given by the Government, the functioning of the Policy of 2018 and it raised grievance that the change in pricing methodology had been introduced without legal justification. The petitioner requested the OMC to revert to the earlier formula of cost of production plus 50% profit for determining the floor price of bauxite and to apply the same formula for pending and future dues inasmuch as the revised pricing method was onerous and unfair.

Having thus afforded opportunity to the petitioner on 22.03.2023 pursuant to notice issued on 21.03.2023, the OMC passed order dated 16.03.2023 rejecting the petitioner‘s request and held that it was not possible to accept the demand for fixation of the price of bauxite ore at the cost of production plus 50% profit for the supplies already made from September 2020 to February 2023 and up to 19.04.2023. It is further opined that the LTL sales agreement did not contain any provision for calculation of floor price applicable to the national e- auction, and that the sale agreement had to be read in conformity with the Rules, and that the Government of India had not clarified that Rule 45 was inapplicable to commercial sale of bauxite. The reason of the OMC is that pricing mechanism adopted for various e-auctions had been based on directions received from the Government of Odisha from time to time and that the price of Rs.1,000 per metric tonne was only an interim arrangement and the petitioner could not be extended any special treatment. Such decision of OMC has been attacked as inconsistent with the earlier policy framework and the contractual arrangement.

Assailing the Order dated 16.03.2023, the petitioner has come up before this Court by way of filing the present writ petition by contending that unless the interim protection is continued, it would be deprived of access to bauxite from the OMC stockyard and would suffer serious prejudice affecting its ongoing operations and expansion plans. At the stage of fresh admission:

This Court at the stage of entertainment of the writ petition, while issuing notice to the opposite parties, passed the following interim order on 29.03.2023: “This application has been filed by the petitioner for grant of interim protection.

Mr. D. Mehta, learned Senior Counsel appearing for the petitioner contended that earlier the petitioner had approached this Court by filing W.P.(C) No. 10280 of 2021, which was disposed of vide order dated 25.01.20231 directing the authority to consider the grievance of the petitioner, but the same was rejected. It is further contended that in the said writ petition, this Court, vide interim order dated 06.04.2022 passed in I.A. No.2662 of 2021 permitted the petitioner to lift the agreed quantity of Bauxite for the remaining period of the financial year 2022-23 subject to payment of Rs.1,000/- per MT which price will be exclusive of royalty, DMF & NMET, GST, weighment and sampling analysis charges, which will be charged extra, upon the 1 A common order dated 25.01.2023 in W.P.(C) No.10280 of 2021 (Vedanta Limited Vrs. Odisha Mining Corporation Limited) and W.P.(C) No.9358 of 2021 (Bharat Aluminium Co. Ltd.) was passed which is reproduced as follows:

Shareholding pattern contained therein provided that: “Shareholding pattern: OMC will be allowed 26% of the issued and paid up equity share capital of the JVC in consideration of expenses incurred in respect of services rendered by OMC for operating the mines by the JVC as a raising contractor and 74% of the equity share capital will be held by VEDANTA. Throughout the tenure of this Agreement OMC‟s share holding will be minimum 26% of the issued and paid up share capital free and clear of all liens, restrictions, security interests and other adverse claims. OMC will not be required to contribute any cash at any point of time, or make any financial commitment to the JVC of any nature.”

Learned Senior Advocate submitted that the controversy may be traced to the Joint Venture Agreement executed in the year 2004 between the OMC and the Sterlite/Vedanta. Under the said arrangement, the bauxite raised by the JVC was to be purchased by the Vedanta from the OMC. The consideration payable to the OMC was to comprise the raising cost, royalty payable to the Government of Odisha and other statutory dues payable to the State Government or any other competent statutory authority. The agreement further stipulated that until such time the alumina refinery was operational, Vedanta would pay to the OMC an amount equivalent to the prevailing rate of royalty for every tonne of bauxite mined. However, from the date on which both the refinery and the aluminium smelter became operational, Vedanta was required to pay to the OMC an amount equivalent to 50% of the prevailing rate of royalty.

The bauxite supplies commenced only in 2018 and, consequently, the contractual mechanism governing the price of bauxite remained material to the dispute. It is expressly provided in the agreement that the bauxite ore extracted from the mines would be utilised exclusively in the proposed refinery and the OMC would not sell such bauxite to any other person. The exclusivity of supply is, thus, an integral component of the arrangement between the parties.

Subject to force majeure, in the event in absence of achieving any milestone specified in the agreement by the Vedanta due to gross negligence or for the causes directly attributable to it, the OMC could issue a notice to Vedanta. Upon receipt of such notice, the parties were required to discuss in good faith. Upon expiry of the period of sixty days stipulated for such purpose, and unless otherwise agreed between the parties, the OMC could not terminate the agreement by issuing written notice of termination to Vedanta. During the said period, however, the obligations of the parties were to continue to subsist on a best efforts basis. The agreement also incorporated a condition precedent, whereby its coming into effect was made conditional upon completion of construction of the refinery, which was completed in 2009. 9. 7. He submitted that the entire quantity of bauxite raised from the concerned mine was to be utilised exclusively in the proposed aluminium plant to be established at Lanjigarh by the Sterlite (now named as ―Vedanta‖). The petitioner relies upon this condition to demonstrate that the proposed mining arrangement was intended primarily to secure the supply of bauxite to its aluminium project. Although the concerned mine did not ultimately commence production, under the arrangements contemplated between the parties, the mines to be identified for securing approximately 150 million tonnes of bauxite were intended to supply the entire quantity to the petitioner. Another Memorandum of Understanding (―MoU‖, for short) was executed on 04.04.2007 between the Government of Odisha and the Vedanta that reveals that the OMC was required to take necessary steps for executing an agreement with the Vedanta, subject to the approval of the Government. The Government of Odisha acknowledged the role of the Vedanta as a responsible corporate entity having substantial involvement in employee welfare and social development. The Vedanta would extend its development-oriented approach to the alumina refinery, captive power plant and smelter facilities proposed to be established in the State.

The MoU also contemplated that, in matters of employment, preference would be given to persons from Odisha, including local persons, subject to the requirements of the project and the possession of requisite qualifications. Vedanta was further expected to make efforts to improve the skill levels of such persons, including through specialised training wherever necessary. The MoU was to remain valid for a period of two years from the date of its execution. Any further extension was to be considered in accordance with the applicable terms. However, no extension was to be considered until substantial progress had been made by the Vedanta in implementing the project, particularly in relation to construction and development. He referred to Clause 7 of the MoU, which stipulated that, in the event of non-implementation of the project, or any part thereof, the corresponding support or obligations of the Government of Odisha under the MoU in relation to bauxite mines, coal blocks, incentives and concessions would stand withdrawn.

The MoU, 2007 constituted clear indication of the proposed expansion of the project to include the aluminium smelter at Jharsuguda, Odisha. The petitioner submits that the project subsequently developed into a major end-to-end aluminium manufacturing facility, requiring substantial quantities of alumina and also large quantities of bauxite. The arrangements contemplated that the State of Odisha would establish a Special Purpose Vehicle (―SPV‖, abbreviated) for development of the scheduled area of Lanjigarh, in which the stakeholders would include the State of Odisha, the OMC and the Sterlite2. Provision was made for contribution towards the development of the Lanjigarh area from the profits generated from the relevant operations. The annual report of the SPV was to be submitted to the Central Empowered Committee (CEC), constituted by the Supreme Court of India, and any non-utilisation or improper utilisation of the funds was to be brought to the notice of the Court.

Attention is drawn to the Judgment dated 08.08.2008 passed in I.A. No.2134 of 2007 in W.P.(C) No. 202 of 1995, titled T.N. Godavaraman Thirumulpad Vrs. Union of India & Ors., [(2008) 11 SCR 1091], wherein the Hon‘ble Supreme Court of India recorded the Petitioner‘s acceptance of several onerous conditions as a prerequisite for Forest Clearance, including: i) The accounts of SPV will be prepared by the statutory auditors of the OMC, and they shall be 2 See, T.N. Godavaraman Thirumulpad Vrs. Union of India, (2007) 12 SCR 447. audited by the Auditor General for State of Odisha every year. M/s Sterlite Industries India Ltd. (―Sterlite‖, for convenience) will deposit, every year commencing from 01.04.2007, 5% of its annual profits before tax and interest from Lanjigarh Project or Rs 10 crores whichever is higher for Scheduled Area Development with the said SPV and it shall be the duty of the said SPV to account for the expenses each year. The annual report of SPV shall be submitted to CEC every year. If CEC finds non-utilisation or misutilisation of funds the same shall be brought to the notice of the Court. While calculating annual profits before tax and interest Sterlite shall do so on the basis of the market value of the material which is sold by the OMC to the Sterlite or its nominee. ii) In addition to what is stated above, Sterlite shall pay NPV of Rs.55 crores and Rs.50.53 crores towards Wildlife Management Plan for Conservation and Management of Wildlife around Lanjigarh bauxite mine and Rs. 12.20 crores towards tribal development. In addition, Sterlite shall also bear expenses towards compensatory afforestation. The Hon‘ble Supreme Court, vide order dated 08.08.2008, further acknowledged that this additional financial outlay, undertaken by the Petitioner pursuant to the previous order dated 23.11.2007, might actually entitle it to a reduction in bauxite pricing below the rates originally stipulated in the 05.10.2004 Agreement. The Hon‘ble Supreme Court mandated that:

The arrangements also contemplated payment towards the Net Present Value (NPV) which includes wildlife management and conservation, compensatory afforestation and other measures connected with rehabilitation and environmental protection. A statement was also required to be filed regarding the persons proposed to be absorbed on a permanent basis, including land losers, as well as persons proposed to be employed through contractors. The State Government placed certain suggestions before the Court. It was indicated that, if CIL accepted the rehabilitation package, it would be at liberty to approach the Court by an appropriate application. The rehabilitation package was accepted by CIL without any condition. The CEC observed that the annual profit before tax and interest could be affected by the pricing mechanism contained in Clause 2.3.3(A) of the Joint Venture Agreement dated 05.10.2004. 9. 12. The petitioner asserts that the price payable for bauxite was not intended to be determined unilaterally and any alteration was to be considered on the basis of the financial accounts and the report of the competent auditing authority.

The OMC had been unable to obtain the requisite mining leases over Lanjigarh, Karlapat or any other identified mine. Though the OMC is stated to have made efforts to secure the leases, but failed. This could be attributed to the OMC, but to be treated as default on the part of Vedanta. Notwithstanding the uncertainties surrounding the availability of bauxite, it had invested more than ₹6,000 crore in establishing the Lanjigarh alumina refinery and had commissioned the refinery in less than thirty months. The refinery started operation with bauxite procured from external sources, resulting in substantial losses, which, according to Vedanta, had accumulated to more than ₹3,000 crore. It had made substantial downstream investments, including in the aluminium smelter and captive power facilities at Jharsuguda, in fulfilment of the commitments arising from the MoU and related arrangements. The assurance regarding availability of bauxite had constituted the foundation for the investment made in the refinery and downstream facilities. It is, therefore, contended that the substantial investments made in Odisha had been undertaken on the strength of the commitments and assurances extended by the State and the OMC. It is further submitted that the scale of the aluminium smelter and associated facilities established by it demonstrate the magnitude of the investment and the extent to which the project was dependent upon reliable and assured supply of bauxite.

Learned Senior Advocate urged that it had become one of the largest investors in the State and had generated substantial employment opportunities. Its continued commitment towards the industrial development in Odisha includes providing preference to local persons in employment.

Section 10A and Section 17A(2)(b) as amended in the Mines and Minerals (Development and Regulation) Act on and from 26.03.2015 brought about change and such change put restrictions having bearing upon the continuation of the Joint Venture arrangement. According to the petitioner, the statutory requirement by way of amendment constituted a substantial impediment to the structure of the original Joint Venture. In view of the amendment to the MMDR Act in 2015, the Government company was required to hold more than 74% of the Joint Venture and the Joint Venture partner was required to be selected through a competitive bidding process. The petitioner, however, contends that the statutory restriction related to the manner in which mining could thereafter be undertaken did not extinguish the separate commitment regarding supply of bauxite to the refinery. Thereafter, in terms of Clause 2.3.3(F) of the Joint Venture Agreement, the OMC called upon the petitioner to participate in discussions in relation to the show-cause notice proposing termination of the Joint Venture. Although the Joint Venture Company had been formed, no bauxite had been raised by the OMC and the requisite mining lease had not been granted in respect of Lanjigarh, Karlapat or other identified areas. Relying upon the commitments to the State as per the MOU and the Joint Venture in order to secure 150 million tonnes of bauxite, it commissioned the alumina refinery with captive power facilities at Lanjigarh and the aluminium smelter with captive power facilities at Jharsuguda. Approximately 2,060 acres of land were acquired for establishing the refinery facility, with corresponding compensation and rehabilitation obligations. It also claims to have generated substantial employment, incurred significant expenditure and contributed to the development of downstream and ancillary industries and to the State exchequer. Hence, unilateral termination of the Joint Venture arrangement, which constituted the principal instrument for securing the contemplated supply of 150 million tonnes of bauxite, would jeopardise the project and render the substantial investment made by it commercially redundant. Against this background, the petitioner requested that the commitments contained in the 2004 arrangement relating to supply of 150 million tonnes of bauxite be protected and continued.

The OMC, in its counter-affidavit, acknowledged that the alumina refinery established by Vedanta was facing an acute shortage of bauxite ore and stated that increasing production of bauxite in the State was in the interest of economic development. The Joint Venture agreement dated 18.02.2009/ was ultimately terminated on 30.09.2015 (Annexure-107).

The petitioner thereafter made a representation to the Chief Minister. A Gazette Notification No.1478, dated 17.10.2015 (Annexure-109) was also issued subsequent to the termination, whereby, inter alia, it was recorded that the terms and conditions were issued for grant of mining lease for bauxite over an area of approximately 721.323 hectares in Lanjigarh in favour of the OMC with additional condition that the entire quantity of bauxite raised from the area was to be utilised exclusively in the proposed alumina plant at Lanjigarh to be established by the Sterlite/Vedanta. The notification further recognised that, after the amendment to the MMDR Act, it would not be permissible for the Government to transfer the mine of OMC to a Joint Venture Company in which private parties held a controlling stake. A High- Level Committee comprised of six members headed by the Chief Secretary was constituted by virtue of said notification. According to the petitioner, the purpose of the Committee was to examine and devise an appropriate mechanism for ensuring long-term supply of bauxite to the petitioner‘s alumina refinery in view of the legal impediment created by the amended statutory framework. On 24.11.2015, the petitioner was given an opportunity to place its case before the Committee. The petitioner expressed its expectation that the Committee would appreciate the gravity of the situation and make suitable recommendations for ensuring long-term supply of bauxite to the Lanjigarh refinery.

Referring to its representation dated 13.11.2015, it is contended that the petitioner made substantial investments in the State on the basis of repeated assurances to make bauxite available on the terms and conditions earlier agreed to between the parties. In absence of firm commitment regarding supply of bauxite in accordance with the Joint Venture arrangement the petitioner is at disadvantageous position. The MMDR Act is not silent about reservation of areas for mining operations by the State Government or by Government Companies or Corporations owned or controlled by it. The statutory framework contemplated different modes by which mining operations could be undertaken, including by the State itself, through a Government Company or Corporation, or through arrangements requiring the approval of the Central Government. Section 17A(2) of the said Act provides scope for the State Government with the approval of the Central Government to reserve an area not already held under a prospecting or mining licence for undertaking prospecting or mining operations through a Government company or Corporation owned or controlled by it. The restriction of five-years introduced by virtue of the Mines and Minerals (Development and Regulation) Amendment Act, 2015 was not in vogue under the earlier statutory framework and, therefore, it could not retrospectively defeat the rights and commitments arising from the earlier arrangements.

The MC Rules, 2016, having introduced formula for calculating the average sale price of metallurgical-grade bauxite used in the extraction of alumina and aluminium are intended for determining the value of mineral blocks for the purpose of auction and grant of mineral concessions and it has no bearing to govern the mercantile sale of bauxite already extracted and offered for sale. Notwithstanding the introduction of the formula, the State Government authorities did not apply the same mechanism while determining the price of bauxite supplied to it. Subsequently, however, the State sought to rely upon the said formula for fixing the floor price for bauxite auctions.

The rights and commitments arising from arrangement in agreement of the year 2004 had already accrued prior to the Mines and Minerals (Development and Regulation) (Amendment) Act, 2015. It made payments aggregating approximately ₹140 crore, including ₹55 crore towards NPV, ₹50 crore towards the wildlife management plan, ₹12 crore towards tribal development and ₹2 crore towards compensatory afforestation. The petitioner is willing to fulfil its commitments concerning the refinery and smelter. The OMC cannot be permitted to take advantage of its own failure to pursue the requisite proceedings and obtain the necessary approvals for commencement of mining operations. After a prolonged period during which the petitioner was required to procure bauxite from the open market, the State introduced a policy which, according to the petitioner, provided the first viable mechanism for obtaining bauxite through LTL.

Having the position being apprised, Sri Vikas Singh, learned Senior Advocate would confined his argument by laying stress on the principle of promissory estoppel. He laid much emphasis on the decisions rendered in the case of Motilal Padampat Sugar Mills Co. Ltd. Vrs. State of Uttar Pradesh, (1979) 2 SCC 409 and subsequent decisions affirming that principle. Despite absence of any alternative bargaining power and the urgent requirement to commence regular operations, it accepted the policy mechanism with the hope of obtaining a regular supply of bauxite, notwithstanding that the pricing mechanism was somewhat higher than that contemplated under the agreement of 2004. Under the Government of Odisha in Steel and Mines Department Notification No.1323-VSL-18/14/SM, dated 24.02.2018 [Odisha Gazette, Extraordinary No.292, dated 26.02.2018], with the respect to Bauxite Linkage the following is stipulated: “a. 70% of the saleable stock shall be made available for long-term linkage to the State-based end-users and the remaining 30% shall be sold through national e-auction to be done every six months for price discovery. b. Weighted average price arrived at from the national e-auction should be the long-term linkage price for the appropriate grades of mineral. State-based end- user plants having long-term linkage can also take part in the auction. c. Floor price for the national e-auction may be fixed at the cost of production plus margin of profit of 50%.” 9. 22. It is, therefore, contended that the cost of production plus 50% margin of profit resulted in a price substantially higher than the price mechanism contemplated under the agreement of 2004, whereof it was required to pay the raising cost and the applicable royalty, with the royalty component being reduced upon commencement of the smelter.

Nevertheless, having waited for several years for the assured supply and having made substantial investments based on such assurances, the petitioner accepted the policy mechanism. The floor price was approximately ₹462 per tonne and the discovered price was ₹465 per tonne. The petitioner agreed to procure bauxite at the discovered price. Subsequently, a Long- Term Linkage Sales Agreement was executed between the OMC and the petitioner for supply of bauxite for the period 2018–2023. Under the mechanism adopted, the long-term sale price would fluctuate with each subsequent auction. A national e-auction was conducted on 03.10.2018, in which the floor price and discovered price were stated to be approximately ₹673 per tonne. Thereafter, a further policy was introduced in 2019 by way of the Minerals (Other than Atomic and Hydro- Carbon Energy Minerals) Concession (Amendment) Rules, 2019. The policy continued the broad mechanism whereby 70% of the saleable stock was to be supplied through long-term linkage and 30% through national e- auction. The floor price was again linked to the cost of production plus a margin of profit. However, this amendment dated 20.09.2019 introduced a conversion factor into a formula based for calculating the average sale price of metallurgical-grade bauxite. According to the petitioner, the conversion factor had not formed part of the formula when the relevant provision was initially introduced in the said MC Rules of 2016. The petitioner, therefore, disputes the manner in which the formula was subsequently applied to mercantile sales of bauxite. The State Government‘s communication recorded that the formula appeared unrealistic and that its application would adversely affect the economics of the alumina and aluminium industry. The average sale price calculated under the notified formula appeared substantially higher than the actual value of metallurgical-grade bauxite. The communication also referred to the price discovered through transparent electronic auctions conducted by the OMC and observed that the price discovered through such auctions was substantially lower than the average sale price calculated under the statutory formula. The State Government further noted that the conversion factor of 6.4% had been derived by backward calculation from the London Metal Exchange price of aluminium by taking into consideration the assumed values and percentages attributable to different components of the production process. The methodology adopted might not accurately reflect the actual conversion factor and even a slight variation in the conversion factor could result in a substantial change in the calculated average sale price. The State Government recognised that the average sale price was required primarily for determining the monetary value of mineral resources and assessing the eligibility and financial requirements of prospective bidders participating in auctions for mineral concessions. The statutory formula was designed for valuation of mineral resources for the purpose of auctioning mineral concessions and was not intended to determine the mercantile sale price of bauxite extracted from an existing mine. The distinction between a mineral-block auction and a mercantile sale of extracted bauxite is fundamental. In the former case, the statutory formula is relevant for estimating the value of the mineral concession and determining the financial parameters for participation in the auction. It does not govern the price at which already extracted bauxite is sold.

While comparable industries such as Hindalco and NALCO are procuring bauxite at substantially lower rates, the petitioner was required to pay approximately ₹1,000 per tonne, resulting in a significant disparity in the cost of raw material. The petitioner continued to request that the price be determined on the basis of the cost of production plus 50% margin of profit, which, according to it, was the mechanism contemplated by the earlier policy. The OMC subsequently raised a demand of approximately ₹2,000 crore from the petitioner on the basis that the reserve price determined under the auction mechanism constituted the applicable price and that the difference payable by the petitioner was recoverable as arrears. The petitioner states that, when a small quantity of bauxite was eventually sold at a price of approximately ₹3,000 per tonne in one of the later auctions, it realised that the pricing mechanism had materially departed from the earlier contractual and policy arrangements.

The petitioner acted upon the representations by establishing the refinery, smelter and captive power facilities making substantial investments in the State. The petitioner, therefore, craves that the State cannot renegade from the representations and commitments on the basis of which the investments were made.

The principal submission of the petitioner, therefore, boils down to application of promissory estoppel vis-a-vis the termination or restructuring of the Joint Venture on account of the subsequent statutory amendment concerning the ownership structure of mining operations. It is forcefully submitted that notwithstanding the statutory changes and the constitution of the Joint Venture, the State and the OMC remained bound to consider and honour the commitments made regarding supply of bauxite, particularly in view of the substantial investments and obligations undertaken by the petitioner. The State cannot take advantage of its own inability or failure to secure the mining leases after inducing the petitioner to make substantial investments on the representation that adequate bauxite would be made available. Subsequent statutory amendments may regulate the manner in which mining rights can be granted or exercised, but the same cannot retrospectively obliterate or efface the consequences flowing from such representations, assurances and commitments made prior thereto. The petitioner having demonstrably altered its position by investing substantial resources, the OMC is bound to comply with the commitment. Submissions made by the opposite party No.1:

Per contra, learned Senior Advocate appearing for the opposite party No.1-OMC, opposed the contentions and averments of the writ petitioner and submitted that the claim made by the petitioner is contrary to the contemporaneous official records and statutory interdiction. 10. 1. He vociferously submitted that the doctrine of promissory estoppel is not attracted in the instant matter. The petitioner seeks enforcement of alleged assurances contained in agreements and seeks a direction for supply of bauxite at the rates contemplated under the earlier agreements. Nevertheless, the agreements relied upon by the petitioner have either expired, stood terminated, or became incapable of being implemented by operation of law. Consequently, no enforceable promise survives on the basis of which the doctrine of promissory estoppel can be invoked.

The Memoranda of Understanding executed in 2003 and 2007 contemplated the establishment of an integrated aluminium complex and the grant of mining leases, subject to the requisite statutory and environmental clearances. The obligations of the State were expressly subject to the constitutional and statutory provisions governing the project. The relevant MoU also contemplated that, in the event of non-implementation of the project, the corresponding support obligations of the Government would stand withdrawn.

The mining leases contemplated under the aforesaid arrangements could not ultimately be granted despite efforts by the Government of Odisha, the Odisha Mining Corporation and the petitioner, including proceedings before the Supreme Court of India. The requisite forest and environmental clearances were not obtained and the proposals for grant of clearance were ultimately rejected. Consequently, the underlying mining arrangements paled into significance for being implemented.

The Joint Venture Agreement was specifically intended for the operation of identified bauxite mines and contemplated that the mining operations would be undertaken by the Joint Venture Company. The bauxite raised by the Joint Venture Company was thereafter to be purchased by the petitioner under the long-term purchase arrangement at the price determined in accordance with the agreed mechanism. Thus, the obligation to raise and supply bauxite under the relevant arrangement was intrinsically connected with the existence and operation of the Joint Venture Company and the availability of the identified mining leases.

The Joint Venture Company never became operational and the contemplated mining leases were never obtained. The arrangement, therefore, became incapable of being performed. The amendment to the Mines and Minerals (Development and Regulation) Act, 1957, particularly the provisions governing existing rights and the constitution and shareholding of the Government Companies, further altered the legal framework and rendered the earlier arrangement incapable of implementation. The earlier contractual mechanism could not, therefore, be insisted for enforcement, doing so would be to negate the statutory requirement.

It is argued that the doctrine of promissory estoppel cannot be invoked to compel the Government or a statutory corporation to act contrary to law. No representation or promise can prevent the State from enforcing or defy statutory prohibition. It is settled principle that principle of estoppel cannot override the law.3 There is no concept of estoppel against statute and, thereby, promissory estoppel cannot be employed to permit or condone a breach of law, nor can it compel a public authority to perform an obligation which has become inconsistent with the governing statutory provisions.

The earlier agreements ceased to operate by efflux of time and/or by termination. The arrangements suggested under the MoU were for a limited duration and no enforceable right would have survived after their expiry in the absence of valid extension. The Joint Venture Agreement was subsequently terminated after due consideration and after the necessary Governmental approval.

After termination of the earlier arrangements, the petitioner participated in the subsequently introduced

The petitioner also accepted the revised pricing mechanism. Under the subsequent LTL policy, a specified proportion of bauxite was to be supplied to long-term linkage holders and the remaining quantity was to be disposed of through auction. The petitioner participated in the revised mechanism and accepted the applicable pricing framework. It, therefore, of promissory estoppel, cannot insist upon the pricing mechanism contained in the earlier agreements after having accepted the subsequent policy regime. The long-term linkage sale agreement executed subsequently provided for a specified annual quantity and duration and incorporated the prevailing policy and pricing mechanism. The subsequent arrangement, thus, superseded or replaced the earlier contractual understanding concerning the supply of bauxite. The petitioner, having entered into and availed the benefit of such subsequent arrangements, cannot claim specific performance or enforcement of the earlier agreements.

The petitioner had not, at the relevant time, asserted that the earlier agreements continued to confer upon it an assured right to receive a specified quantity of bauxite at the earlier contractual price. It is too late in the day to set up the claim that the earlier agreements were only partially terminated and obligation to supply bauxite at the earlier price continued. The belated claim demonstrates that it is an afterthought and is inconsistent with not only statutory interdict, but also tells about the petitioner‘s conduct of acquiescence and contrary to the contemporaneous record.

The petitioner had also received substantial quantities of bauxite under the subsequent LTL arrangements. Such supplies were made under the prevailing policy and not under the pricing mechanism contained in the earlier agreements. It is incomprehensible on the one hand to accept the benefits of the subsequent statutory policy framework and seek to enforce the terms of agreements, which had ceased to operate on the other.

The investment made by the petitioner in establishing its refinery, smelter, power plant and other facilities cannot, by itself, create an enforceable right to obtain bauxite at a particular price or quantity contrary to the prevailing mechanism. Such investments were made as part of commercial enterprise and cannot be treated as consideration for compelling the State or the Odisha Mining Corporation to act contrary to law.

The claim seeking adjustment of bauxite already supplied against the quantity contemplated under the earlier arrangements and further supply at the old contractual rates was not raised at the appropriate stage and was introduced subsequently. Such a claim founded upon promissory estoppel, being belated, cannot be permitted to revive contractual rights, which had already ceased to exist.

The statutory amendments materially altered the legal position concerning mining rights, the grant of mining leases and the structure of Government participation in mining operations. The earlier arrangement contemplated a particular shareholding and management structure, whereas the amended statutory framework required a substantially different structure and competitive process. The earlier Joint Venture arrangement, therefore, could not lawfully continue in its original form.

The statutory and policy developments also demonstrate that the supply of bauxite was thereafter governed by the LTL policy and the auction mechanism. The petitioner was not granted any perpetual or vested right to receive bauxite at the price prescribed under the earlier agreements/arrangements. The applicable price was to be determined in accordance with the prevailing policy and, wherever applicable, through the auction mechanism.

The national e-auction mechanism and the determination of the floor price are matters governed by the applicable statutory rules and governmental policies. The mechanism for determining the average sale price and floor price has undergone sea change. The Odisha Mining Corporation, while conducting auctions for merchant sale of bauxite, is required to operate within the existing statutory structure and policy framework. It is fallacious on the part of the petitioner to rely upon the doctrine of promissory estoppel to compel the Odisha Mining Corporation or the State Government to supply bauxite at a price which is inconsistent with the law or the policy presently governing such supply. The doctrine cannot be invoked to defeat statutory provisions or render the provisions of the statute nugatory.

The petitioner‘s subsequent conduct, including its participation in the long-term linkage process, acceptance of the revised pricing mechanism and execution of subsequent supply agreements, is inconsistent with the assertion of a continuing right under the earlier agreements. Having accepted the subsequent arrangement, the petitioner cannot approbate and reprobate4 by relying upon the earlier agreements for the purpose of claiming a more favourable price or quantity.

It is, therefore, submitted that no subsisting, enforceable or legally protected right survives in favour of the petitioner under the earlier MoUs, Joint Venture Agreement or long-term purchase arrangement. The petitioner‘s claim for supply of bauxite at the earlier contractual price and for adjustment of past supplies against the earlier contemplated quantity is consequently untenable. The relief sought for by the 4 See, Samir Ranjan Pradhan Vrs. Union of India, W.P.(C) No.853 of 2023, decided by this Court vide Order dated 09.01.2025 by referring to V. Chandrasekaran Vrs. The Administrative Officer, (2012) 10 SCR 603 = 2012 INSC 407; Mumtaz Yarud Dowla Wakf Vrs. Badam Balakrishna Hotel Pvt. Ltd., (2023) 15 SCR 984 = 2023 INSC 949; Suzuki Parasrampuria Suitings Private Limited Vrs. Official Liquidator of Mahendra Petrochemicals Limited, (2018) 10 SCC 707. petitioner would, in substance, require the State Government and the Odisha Mining Corporation to act contrary to the statutory regime and the policies governing the disposal and supply of bauxite. Such a direction cannot be issued in exercise of the writ juri iction, particularly where the alleged right is founded upon agreements which have expired, been terminated or become incapable of performance by operation of law. Arguments advanced by the learned Advocate General:

At the outset, learned Advocate General appearing for the State-opposite party No.2 approached to argue 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 in limine.

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, i.e., 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.

It is submitted that pursuant to the amendment to the MMDR Act, 1957, with effect from 12.01.2015, in view of Section 17-A(2B) due to non-fulfilment of obligations by the petitioner, the Joint Venture Agreements dated 05.10.2004 and 18.02.2009 were lawfully terminated by OMC on 29/30.09.20155 after providing due opportunity to the petitioner and after obtaining approval of the Government of Odisha. The said termination has never been challenged by the petitioner at any point of time

Though not in express terms, the doctrine of promissory its representation in the following:

However, in Motilal Padampat Sugar Mills Co. Ltd. Vs. but it can also be used as a sword in the following:

In Union of India and others Vs. Godfrey Philips India Ltd., reported in (1985) 4 SCC 369, a three Judge Bench of the Supreme Court reiterated the principles that if such provisions are countered to the statutory provisions, the Government cannot promise something which is forbidden in law. In the above aspect, the Supreme Court has held as under:

However, in case of Hero Moto Corp Limited Vs. Union of India and others reported in (2023) 1 SCC 386, the Supreme Court after taking note of the earlier judgments rendered on the concept of promissory estoppel unequivocally held that there cannot be any estoppel against the legislature in exercise of the legislative functions and the only exception which is carved out to prevent a fraud or manifest injustice in the following:

In Manuelsons Hotels Private Limited Vrs. State of Kerala, (2016) 3 SCR 718, it has been observed as follows:

In Rupesh R. Gaonkar Vrs. State of Goa, (2026) 8 SCR 431 it has been succinctly held as follows:

The cumulative effect of the authoritative judgments rendered on the doctrine of promissory estoppel leaves no ambiguity that it is a valid doctrine recognized in legal parlance and its applicability cannot be restricted to the private individuals but transgress its boundaries to the Government or a public authority. Though as a sound principle of law, it can be used as a sword and may constitute an integral part of the cause of action, yet it has an exception attached to it. The basic feature of the promissory estoppel is founded upon the conduct of the party, who was induced to alter his position to its prejudice but equally it would not apply to a given situation aiming at preventing a fraud and/or misrepresentation. The doctrine loses its applicability when the promise is contrary to the statutory provisions or on an overwhelming interest of larger public. It would not be applicable in relation to utilization of the natural resources which is wealth and/or asset of the nation and the Government acts as its custodian.

Based on such broader principles enunciated in the above decisions, let us examine whether the facts involved in the instant case projecting the conduct of the parties in relation to a transactions vis-a-vis the statutory provisions relatable to a pricing of the natural resources, the plea of promissory estoppel has any leg to stand upon.

By way of written note of submission, the petitioner clearly admitted the fact that in 2018, it agreed to receive bauxite under the LTL Policy of 2018. However, it sought to revive its rights under the initial assurance being made by way of MoUs and Agreements prior to amendment to the MMDR Act in the year 2015 specifying modality for determination of average sale price under Rule 45 of the MC Rules, as substituted by Notification No. G.S.R. 674(E), dated 20.9.2019, which stands as follows: “Formula for calculating average sale price for metallurgical grade Bauxite to be used in alumina and aluminium extraction, Limestone, Tungsten.— (1) The State Government shall arrive at the average sale price of metallurgical Bauxite in the following manner: Average Sale Price = 52.90% X Percentage of Al2O3 in bauxite on dry basis X Average aluminium price in Indian rupees for the month as published by IBM X Conversion factor6 as notified by the Central Government.”

The inconsistent stand taken by the petitioner that it has been representing the Government of Odisha for resurrection of the Joint Venture Company with the OMC so as to get the supply of bauxite at the old price. For basically two reasons the claim of the petitioner cannot be countenanced, viz., by participating in the later process as laid down the amended provisions, it has acquiesced by its own conduct; this is particularly so when the JVC came to be terminated being decided in presence of representative of Sterlite/Vedanta and the OMC (Annexure-107). Validity of such termination in the year 2015 was never questioned, which attained finality.

In this respect, regard may be had to Jaya Chandra Mohapatra Vrs. Land Acquisition Officer, (2004) Supp.6 SCR 235, wherein it has been stated thus:

The answering opposite parties have clearly asserted that the original MoU dated 07.06.2003 stood superseded upon execution of the subsequent MoU dated 04.04.2007 and by lapse of period of two years, said MoU dated 04.04.2007 itself got non-existent as no extension thereof was ever granted by the State Government. By virtue of the amendment to the MMDR Act, 1957, with effect from 12.01.2015, in view of Section 17-A(2-B) of the MMDR Act due to non- fulfilment of obligations by the petitioner, the JVC dated 05.10.2004 and 18.02.2009 were lawfully terminated by OMC on 29/30.09.2015 after providing due opportunity to the petitioner and its representatives. The said termination remained unassailed by the petitioner at any point of time and has, thus, attained finality. After long lapse of time the petitioner cannot seek revival or indirect enforcement of agreements/MoUs.

The Letter bearing No.12634/OMC/Project/2015, dated 29/30.09.2015 of the OMC without any ambiguous terms with the participation of representatives of M/s. Sterlite Industries (India) Ltd./Vedanta Aluminium Ltd. in express words spelt out that ―the J.V. Agreement stands terminated‖. Though representations were being pursued thereafter nothing tangible occurred to reverse such position. The same remained final in absence of any prayer to show indulgence in such termination of Joint Venture Agreement, this Court desists itself to exercise power under Articles 226 and 227 of the Constitution of India.

In terms of provisions of Section 17-A of the Mines and Minerals (Development and Regulation) Act, 1957 read with Rule 45 of the Minerals (Other than Atomic and Hydro Carbons Energy Minerals) Concession Rules, 2016, the modality for computation of Average Sale Price the opposite parties are justified in raising the demand.

In the wake of the above, while dismissing the writ petition having found no merit, the interim orders passed in the matter stand vacated. The opposite parties are at liberty to take follow up action in accordance with law. In view of disposal of the writ petition, pending interlocutory application(s), if any, shall stand disposed of.