Jaipur: An Adani Group-led mining joint venture unlawfully recovered more than ₹1,400 crore in transportation charges from a Rajasthan government power utility, a Jaipur district court held in a July judgment that has brought rare scrutiny to one of the conglomerate’s most lucrative coal contracts, Scroll.in reported.
The court found that the joint venture, Parsa Kente Collieries Limited, in which Adani Enterprises holds 74 per cent and Rajasthan Rajya Vidyut Utpadan Nigam Limited (RRVUNL) 26 per cent, had claimed and recovered road transportation costs that it was contractually obliged to bear. It ordered the company to pay a ₹50 lakh fine and directed the state government to ask the Comptroller and Auditor General to audit the deal between the two entities. These directions were stayed by the Rajasthan High Court 13 days later.
In its submissions, the state utility admitted it had “very humbly” complied with what it described as the joint venture’s “arm-twisting” to avoid power shortages that could have severely affected the state’s economy. It accused the Adani-led firm of “always extorting” it and “making wrongful gain”.
The dispute centres on a 2007 coal block allocation in Chhattisgarh’s Hasdeo Arand forests to RRVUNL. The Parsa East and Kente Basan block held over 450 million tonnes of coal. Under the then Vasundhara Raje-led BJP government, RRVUNL entered into a joint venture with Adani Enterprises to mine and transport coal to Rajasthan power plants under a Mine Developer and Operator (MDO) model.
The arrangement, formalised through a 2008 Coal Mining and Delivery Agreement, required the joint venture to mine coal and deliver it up to the nearest railway line, for a per-tonne fee that factored in all costs. When mining began in March 2013, there were no railway sidings from the mine to the nearest stations, even though, as the court recorded, it was the responsibility of the Adani-led venture “to build, construct and develop the railway siding from mine head up to the nearest connecting railway line”.
As an interim measure, the two sides agreed to transport coal by road from the mine to railway stations, engaging a transport agency in March 2013. This road haulage arrangement fell outside the written contract, which did not mention road transport. The court noted that RRVUNL bore “the entire cost of road transportation from loading point at the mine head up to the nearest railway stations”, even though, in its view, it was “beyond imagination” that the joint venture “could avoid payment of road transportation charges”. Those charges eventually exceeded ₹1,400 crore.
The litigation, however, did not directly challenge this ₹1,400 crore. Instead, the Adani-led firm sued over claimed interest of about ₹65 crore, alleging that delayed reimbursements by RRVUNL had forced it to take bank loans. According to an informal 2013 arrangement, separate from the main contract and confirmed in a March 2013 letter, the joint venture would pay the transporter and RRVUNL would reimburse the sums within 15 days, with a seven-day grace period.
In February 2018, while the BJP was in power in Rajasthan, RRVUNL refused to pay interest on the alleged delays. After failed attempts at mediation, requested by the joint venture in April 2018 and declined by RRVUNL in August, the company moved court in July 2020, by which time the Congress government led by Ashok Gehlot was in office.
The district court criticised the joint venture for failing to produce crucial records, including the Coal Mining and Delivery Agreement itself, minutes of board meetings, financial books and transaction details, even though they were referenced in its pleadings. This led the court to describe the company’s case as a “half told story” and “selective accounts to the events”.
RRVUNL, for its part, submitted only two interest calculation sheets and no oral or other documentary evidence, forcing the court, in its own words, “go into minor details of the case to rule out any chance of some apparent grave error being committed by the court in delivering the judgment, which also consumed considerable time of the court”.
The court expressed shock that the joint venture, having “failed to perform its obligation to build, develop and construct railway siding from the mine head up to the nearest connecting railway line”, did not bear “at least the burden of road transportation charges for its own default, if had not suffered some penalty on this count”. Instead, it found, the company had reclaimed more than ₹1,400 crore towards road transportation and then sought additional “profit by avoiding interest burden for such cost”.
On this basis, the court concluded that the company had “benefited despite committing default in performance of the contract on multiple counts”, reiterating that “It is settled preposition of law that one cannot take advantage of its own fault.”
The judgment directed the ₹50 lakh fine and called for a CAG audit of the deal, but both measures are currently on hold following a stay by the Rajasthan High Court after an appeal by the Adani-led venture.
Over the years, the MDO model has attracted criticism from independent experts, who argue that it allows private conglomerates to profit from coal blocks reserved for public sector use, while shifting commercial risk to the state. “The problem with this model has always been that it shifts all the risk of running a coal business to the public sector utility while the private company enjoys backdoor access to lucrative mines at secretive prices,” said Dr Priyanshu Gupta, a researcher who tracks the sector.
Adani Enterprises has since become India’s largest coal Mine Developer and Operator, with nine contracts covering more than 2,800 million tonnes of coal. The Jaipur court case, spanning from 2020 to 2025, has therefore cast an unusual spotlight on one of the conglomerate’s most contentious and profitable mining arrangements.