CL-2022-000304 - [2025] EWHC 1553 (Comm)

The Government of Andhra Pradesh issued an Order numbered 222 and dated 13 August 2008 “GOM 222”). This recorded that the Government of AP had constituted a six member High Powered Committee:

“for fixation of sale price of Bauxite and the percentage of equity that [APMDC Ltd] shall demand in the proposed Value Added Industry”.

GOM 222 recorded that the Committee had concluded that APMDC Ltd should enter into a detailed Bauxite Supply agreement, and further:

“(11)

Aluminium Companies shall submit irrevocable Performance Bank Guarantee for an amount of Rs 5.00 cores in favour of [APMDC Ltd] drawn on any Nationalized Bank within a period of 30 days from Signing of Bauxite Supply Agreements between APMDC [Ltd] and the said Aluminium Companies. The Bank Guarantee shall be valid for the total period of the contract.

(12)

All the terms and conditions mentioned in … [the MOU] entered into with the Government of Ras-Al-Khaimah shall also form part of the Bauxite Supply Agreement and [APMDC Ltd] shall ensure fulfilment of those conditions by the Companies.”

GOM 222 concluded:

“7.The Government have examined the matter in detail and after careful consideration, hereby accept and approve the above recommendations of the High Powered Committee, in toto and direct [APMDC Ltd] to enter into Bauxite supply agreements and take necessary further action accordingly by taking the approvals of Government wherever required from time to time, if necessary, and intimate the action taken by them at every stage to Government, scrupulously. The Bauxite Supply Agreement shall be entered into with a stipulation that it shall not be implemented till permission of the Government of India is obtained by Government of Andhra Pradesh/ [APMDC Ltd] under Section 2(ii) of Forest Conservation Act, 1980, and also Environment Clearances for the Bauxite Mining Project as per the directions of Hon’ble High Court of Andhra Pradesh …”

An agreement entitled “Bauxite Supply Agreement” dated 30 October 2008 was entered into between APMDC Ltd and ANRAK Aluminium Ltd. By clause 2.2 it was to “continue to remain in force for a period of the life time of the plant or until exhaustion of the mining reserves of the bauxite in the Mines …” By Clause 21 the agreement “can be altered/terminated with the mutual consent of both parties and with the Government consent.”.

By Clause 35:

“This Agreement shall be governed by the law of India for the time being in force and subject to Clause 27, the City Civil Courts in Hyderabad shall have the excusive jurisdiction in the matter. …”

Recitals recorded that ANRAK Aluminium Ltd was “established in Andhra Pradesh by [the Government of Ras Al Khaimah] through … RAKIA …”. They continued:

“[ANRAK Aluminium Ltd] proposes to establish a 1.5 million tonne per annum (MTPA), alumina refinery plant in Makavaripalem Mandal in Visakhaptnam District in Andhra Pradesh and Aluminium Smelter of 2,50,000 tonne per annum capacity in Andhra Pradesh in the first phase with provision to expand at a location other than scheduled area mutually agreed by two parties with a capital outlay of about 2 Billion US Dollars. To this extent they have entered into MOU with Government of [Andhra Pradesh] on 14^th February, 2007.

… [APMDC Ltd] is a Government of Andhra Pradesh Undertaking which has obtained a Mining Lease for extraction of Bauxite deposits from Jerrela (known as Chintapalli Group) South of Korukonda in Visakhapatnam District of Andhra Pradesh in [GOMs No 358, 359, 360 dated 28 December 2007]. The Government of Andhra Pradesh and Government of Ras Al Khaimah entered into a Memorandum of Understanding (the “MOU”) on 14^th February 2007 in terms of which the Government of Andhra Pradesh agreed to mine and supply Bauxite by APMDC [Ltd] from and out of the Mines more specifically defined hereunder [Jerrela Blocks I, II, III, VIII totalling 1,162.00 Hectares]…”

By Clause 7, under the headings “Obligation to Sale and Purchase” and “Sale and Purchase of Bauxite”:

“(a)

[APMDC Ltd] agrees and undertakes to sell and deliver to [ANRAK Aluminium Ltd] exclusively in a continuous and uninterrupted manner, and [ANRAK Aluminium Ltd] agrees and undertakes to purchase, accept and pay for, the Bauxite in the quantities and having the qualities as required hereby, upon the terms and conditions set out in this Agreement.

(b)

[ANRAK Aluminium Ltd] shall purchase Run of Mine (ROM) ore of Bauxite as produced by [APMDC Ltd] for effective utilization in their refinery and smelter located in Andhra Pradesh only and shall not utilize/sell the same for any other purposes or to a third party.”

By Clauses 27 and 28

“27.

REPEAL

… This Agreement together with any documents referred to in it supersedes any and all oral and written agreements drafts, undertakings, representations, warranties and understandings heretofore made relating to the subject matter hereof and constitutes the entire agreement and understanding of the Parties relating to the subject matter hereof.

28.

OTHER SOCIAL OBLIGATIONS OF [ANRAK Aluminium Ltd]

APMDC [Ltd]/The Aluminium Company shall train the local tribals identified by the Department of Tribal Welfare in mining/allied subjects for making use of them in the proposed project and ultimately absorb them in the mining operations/industry as the case may be as far as possible. Schooling and health facilities will also be provided to the local tribal for their advancement. A minimum of 0.5% of revenue from the value added project shall be spent on the health, training, social infrastructure and welfare of tribals by the said Aluminium Company. The Aluminium company shall deposit the amount annually to APMDC [Ltd] which will spend the same as per Government guidelines on tribal development.”

By Clause 6:

“Equity to [APMDC Ltd] and Representation in the Board of the Company

(a)The equity holding of [APMDC Ltd] in the value added industry to be set up by Aluminium companies will be up to 1.5% of the total equity, subject to a maximum of Rs. 50.00 crores, which shall be by way of adjustment annually out of the sale consideration amount for bauxite payable by the purchaser to APMDC [Ltd] over a period of 10 years. The shares shall be allotted in proportion to the payment made.

(b)

[APMDC Ltd] shall nominate one Director from APMDC [Ltd] on the Board of Directors of the Aluminium Company.”

By Clause 18:

“Infrastructure facilities for the Refinery and Smelter

[ANRAK Aluminium Ltd] shall identify suitable land other than the land in the scheduled areas for establishment of Alumina refinery and Aluminium smelter at their cost.

[ANRAK Aluminium Ltd] shall also create infrastructure amenities like development of roads between the refinery and smelter and bauxite mines of Jerrela Village of Chinthapalli Mandal and water supply, power and other requirements at their own cost. [Government of Andhra Pradesh] shall act as facilitator for the creation of infrastructure by the Aluminium Company.

[ANRAK Aluminium Ltd] shall not depend on power supply and shall go in for captive power generation facility for an uninterrupted power supply to the plant.”

The Government of Andhra Pradesh issued an Order numbered 289 and dated 30 October 2008 (“GOM 289”). This provided:

“… Government hereby approve the said Draft Agreement for Supply of Bauxite Ore … with a condition that this agreement shall not be implemented till the permission of the Government of India is obtained by [APMDC Ltd] under section 2(ii) of Forest Conservation Act, 1980 and also Environment Clearances for the Bauxite Mining project. The Vice Chairman & Managing Director [APMDC Ltd] is permitted to enter into the above agreement with [ANRAK Aluminium Ltd].”

On 12 December 2008 the Ministry of Environment & Forests of the Government of India provided specified environmental clearances subject to conditions. The Tribunal observed that:

“… in contrast to this fairly rapid progress, the applications for forest Clearance proceeded very slowly.”