Gujarat HC Orders Shutdown of 12 units in Adani Ports and SEZ

Cites violation of environmental norms, directs ministry to look into the issue within 30 days

AHMEDABAD: The Rs 56,000-crore Adani Group on Monday received a major blow from the Gujarat High Court, which ordered a shutdown of 12 units in Adani Ports and Special Economic Zone (APSEZ), located in Mundra, Kutch district, with immediate effect. The court ordered a closure of the 12 units in the premises of the SEZ, as these had violated its earlier order of May 2012.

A division Bench of Chief Justice Bhaskar Bhattacharya and J B Pardiwala held that APSEZ violated environmental guidelines by allotting land to individual units in the absence of the mandatory clearance under the Environment Impact Assessment (EIA) Notification, 2006.

The court also directed the Union Ministry of Environment & Forests (MoEF) to look into the issue again within 30 days, after taking into account the high court’s observations and the Sunita Narain committee’s report that had pointed to violation of norms by APSEZ.

In a statement, the Adani group said: “The Gujarat High Court has pronounced an order in a PIL against 12 manufacturing units in Mundra SEZ. These have been directed not to undertake any construction/ operational/ manufacturing activity till environmental clearance is granted… It is clarified beyond doubt that none of the berths at Mundra Port are affected by this order. The operations at Mundra Port are absolutely normal.”

The stocks of Adani Group companies fell on Monday.

The scrip of Adani Enterprises slid 2.02 per cent, while those of Adani Port and Adani Power fell 2.94 per cent and 0.57 per cent, respectively.

The court also dismissed a petition of Alstom Bharat Forge Power Ltd (ABFPL), a joint venture between French energy major Alstom and Bharat Forge, which had sought relief from the stay imposed on power equipment manufacturing project in APSEZ. The company, which has a 120-acre integrated manufacturing facility for turbine, generators and auxiliaries, in the SEZ, had to stop all its operations after a stay by the Gujarat High Court in May 2012.

Senior counsel Mihir Joshi, representing ABFPL, urged the court to give his client some time, as it had pending orders. However, the division Bench rejected his request.

A judgment was given on the PIL filed last year by people of Mundra’s Navinal village. The people had alleged activities continued in the SEZ, despite the high court in 2012 staying construction and further development activities by all units, including the Adani-owned units of APSEZ. The villagers demanded that all units be directed to stop operations till an environmental clearance was given to the entire SEZ.

According to Anand Yagnik, lawyer for the people of Navinal, the court held that no construction or manufacturing could be done as it was illegal and unlawful in the absence of an environmental clearance.

On the question of deemed clearance, as claimed by APSEZ, Yagnik said the court held the company did not have deemed environment clearance, either. “Deemed environmental clearance applies prospectively and not retrospectively,” he added.

In the second quarter of 2013-14, on a standalone basis, APSEZ had posted a 19 per cent drop in its profit after tax (PAT), to Rs 347.62 crore, mainly due to an increase in operating expenses and forex losses. Its total income for the quarter stood at Rs 877.79 crore, up 15 per cent from Rs 764.27 crore in the corresponding period the previous year. On a consolidated basis, APSEZ’s PAT rose 24 per cent to Rs 342 crore, from Rs 276 crore in the corresponding quarter last year. The company’s total income for the quarter grew 55 per cent to Rs 1,149 crore, against Rs 740 crore in the year-ago period.

According to APSEZ’s official website, the company was incorporated as Gujarat Adani Port Ltd (GAPL) to develop a private port at Mundra in 1998 but it started operations in 2001. The SEZ, Mundra Special Economic Zone Ltd (MSEZL), was incorporated in November 2003, merged with GAPL in April 2006, and renamed Mundra Port and Special Economic Zone Ltd (MPSEZL). The board of MPSEZL on November 21, 2011, approved the proposal to change the company’s name to Adani Ports and Special Economic Zone and the name change came into effect from January 6, 2012.

REACHING CLOSURE

Dec ’11: People of Mundra’s Navinal village file PIL against MPSEZ (now APSEZ) and other companies operating in the SEZ

May ’12: Gujarat HC stays construction and further development activities by all units, including the Adani-owned units of APSEZ

Feb 13, ’13: People of Navinal file another PIL, claiming activities continued in the SEZ, despite the HC stay order

Feb 15, ’13: Some affected firms move SC, which grants interim stay on HC order

Mar ’13: SC directs companies to approach Gujarat HC for relief

Jun ’13: Gujarat HC clubs PILs and other related applications by affected companies and begins final hearing

Sep ’13: Hearing ends, order reserved

Jan 13, ’14: Gujarat HC orders shutdown of APSEZ and directs govt to reconsider environmental approval

TAKING THE BLOW

The 12 units in the SEZ the Gujarat HC wants shut down

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