Setback for Reliance Power's Dadri plant

HC quashes use of emergency power for land buys; ADAG firm says it’s a procedural issue.

Reliance Power’s plan to set up the largest gas-fired power project in a single location in the world at Dadri in Uttar Pradesh received a setback today.

The Allahabad High Court quashed the Uttar Pradesh government's earlier notification for using emergency powers to buy land for the Anil Dhirubhai Ambani Group (ADAG) company’s Dadri power project, side-stepping a provision inviting objections from land owners.

The state government will now have to invite objections from farmers, who have the option of either returning the compensation they were paid to reclaim the land or forfeit any claim. Farmers have already given about 2,500 acres for the project.

"The Collector may recover the compensation as arrears of land revenue from the tenure holders who before the Collector do not in writing indicate their no-objection with the acquisition," the judgment said.

Farmers who had protested against the land acquisition claimed victory. Reliance Power, however, said the land acquisition process for the Dadri project had not been set aside and the project would be completed on schedule. The Reliance Power stock ended the day with 3 per cent loss.

The court's judgment follows several petitions filed by farmers challenging acquisition of the land in 2004, when the Samajwadi Party was in power in the state.

The petitioners had questioned the method of land acquisition, saying it was acquired for a "public purpose" under Section 4 of the Land Acquisition Act by the government.

“If the project is for a public purpose, there is no need for an agreement with a private player and an enquiry should have been done under Rule 4,” the petitioners supported by former prime minister V P Singh and Sahyog Samiti, a group of farmers to protest against the project, had demanded.

Passing the order, a division bench comprising Justice Ashok Bhusan and Justice Sudhir Aggrawala said all “subsequent proceedings consequent to the notification of February 11, 2004…are quashed”.

The court also directed the state government to resolve anomalies in land acquisition and seek fresh negotiations with farmers who are objecting to the land acquisition.

The ADA Group plans to approach the Supreme Court against the Allahabad court order, said sources close to the development. However, the company said it would study the order before taking any decision.

Asked about today's judgement, J P Chalasani, chief executive officer of Reliance Power, said the company was reviewing the judgment, but it was clear that the land acquisition for the Dadri project had not been set aside and a notification under Section 4 in relation to acquisition of land had, in fact, been upheld.

"The land has not been taken away but the farmers will need to either give a no-objection certificate or return the compensation for land," he said, adding that the process has to be completed within 30 days. He said putting up a power plant was an activity under "public purpose".

He added that the state government has been directed by the court to follow certain procedures in the land acquisition process and according to the judgment, land owners who wish to raise objections to the acquisition of their land are required to refund the compensation received by them after which the government will decide on their objections.

“Reliance Power is confident that the state government will expeditiously take requisite steps for land acquisition at the earliest to enable the implementation of the project,” Chalasani said, and alleged that corporate rivals of the group were distorting the scope and effect of the judgment.

Rajeev Tyagi, a spokesperson for the Sahyog Samiti, refuted this claim. "The high court has not only clearly quashed this action but also extended their decisions to all the other notifications that proceeded thereafter which can only be interpreted as setting aside of the entire illegal land acquisition process which was done in the past. Thus, the claim that the notification under Section 4 has been upheld is wholly wrong and misleading,” he said.

“The only way this verdict can be interpreted is as a major victory for the 1,500 farmers and their families and any other interpretation can only be termed a subjective inference," he added.

Sources said the Allahabad High Court's judgement will provide a fresh twist to the high-profile legal battle between ADAG firm Reliance Natural Resources Limited (RNRL) and Mukesh Ambani-controlled Reliance Industries in the Supreme Court on gas supplies from the Krishna Godavari (KG) basin for the Dadri project.

The project was planned by the Reliance group headed by late Dhirubhai Ambani much before the reorganisation of Reliance Group's assets between the two brothers in 2005.

"If the gas supply contract (between RIL and RNRL according to the merger terms) had been honoured, we would have by now brought on stream up to 8,000 Mw Dadri Project, overcoming the huge deficit of power that has afflicted Delhi and large parts of Northern India in the last few years," Anil Ambani, chairman had told RNRL shareholders in July, this year.

In January 2009, gas linkage to the Dadri and other power projects were approved by the Cabinet, he had said.