Sardar Sarovar Dam Project takes a hit as Gujarat HC strikes down SSNNL Act

In a significant blow to the Gujarat state government, the Gujarat High Court on Friday struck down the Sardar Sarovar Narmada Nigam (Conferment of Power to Redeem Bonds) Act..Back in 1993, the state government sought to raise funds for the Sardar Sarovar Dam Project. In an issue guaranteed by the Gujarat state government, Sardar Sarovar Narmada Nigam Limited (SSNNL) issued non-convertible bonds and Deep Discount Bonds. Every DDB of Rs. 1,11,000 each was issued at the discounted price of Rs. 3,600, and the said amount of Rs. 1,11,000 was to be paid on January 2014..However, in 2008, the Gujarat state assembly enacted the Sardar Sarovar Narmada Nigam Limited (Conferment of Power of Redeem Bonds) Act, 2008, whereby SSNNL was granted powers to redeem the bonds earlier. The Act empowered the government to terminate the bonds by making a payment of Rs. 50,000 for each bond, which would result in a loss of Rs. 61,000 per bond for each of the 4.1 lakh investors..With this premature termination, the Gujarat government aimed at saving around Rs 4,500 crore, and the final figure would have been Rs 7,000 crore at the end of maturity in 2014..Subsequently, petitions were filed in the high courts of Gujarat, Maharashtra and Karnataka challenging the vires of the Act. The matter even reached the Supreme Court through a transfer petition. In 2013, the apex court directed that all the matters would be decided expeditiously by Gujarat High Court..When the matter came up for hearing in the High Court again in September last year, the petitioners challenged the Act on grounds of legislative competence, Article 14 and 19 of the Constitution, and extra-territorial operation. It was also argued that the framing of such Acts is the prerogative of the Parliament, and not of state assembly, as it falls within the ambit of Company Laws and Acts related to the Security and Exchange Board of India..On October 17, 2015, a Bench comprising Acting Chief Justice Jayant Patel and Nilay Anjaria J. reserved judgment. Then on Friday, the Bench pronounced judgment, declaring the Act to be ultra vires. Though the text of the order is unavailable as yet, it appears that the High Court has held that the investors who had filed objections shall have liberty to approach the Civil Court for recovery..Among the lawyers who appeared in the High Court was Advocate Masoom Shah, who represented Maharastra State Electricity Board’s Contributory Provident Fund through Little & Co.. Image taken from here.