Court dismisses Vedanta’s plea to revive the earlier pricing mechanism for 150 million tonnes of bauxite, holding that terminated agreements cannot be revived or indirectly enforced after subsequent changes in mining law.
HC Rejects Vedanta’s Plea
The Orissa High Court on October 1, 2026, dismissed Vedanta Ltd’s petition seeking restoration of the earlier pricing mechanism for bauxite supplied by the Odisha Mining Corporation (OMC) to its alumina refinery at Lanjigarh in Kalahandi. A division bench comprising Chief Justice Harish Tandon and Justice Murahari Sri Raman held that Vedanta could not seek revival or indirect enforcement of agreements that had already been terminated.
Dispute Dates Back to 2004 Agreement
The dispute centres on an October 5, 2004 agreement between OMC and Vedanta under which the state-owned mining corporation was to supply 150 million tonnes of bauxite for the company’s alumina operations. The pricing mechanism was linked to the cost of production along with a 50% royalty component and applicable statutory dues.
Vedanta Relied on Earlier Assurances
Vedanta argued before the court that it had made substantial investments in Odisha based on assurances regarding long-term bauxite availability and a stable pricing mechanism. The company sought continuation of the pricing arrangement associated with the earlier agreements, despite subsequent changes in the legal and policy framework governing mineral resources.
Earlier Agreements Were Terminated in 2015
The High Court noted that the joint venture agreements dated October 5, 2004 and February 18, 2009 were terminated by OMC in September 2015 following amendments to the Mines and Minerals (Development and Regulation) Act, 1957. The court observed that the termination was not challenged by Vedanta at the time and had therefore attained finality.
2018 LTL Policy Changed the Arrangement
After the earlier arrangement ended, the state introduced the Long Term Linkage (LTL) Policy in 2018. Under the policy, 70% of saleable mineral stock was earmarked for end-user industries, while the remaining 30% was allocated for national e-auction. Vedanta and OMC subsequently entered into an LTL sales arrangement.
Dispute Over Revised Pricing Formula
The pricing dispute intensified after amendments to Rule 45 of the Mineral Concession Rules, 2016. OMC adopted the Average Sale Price mechanism for determining the applicable price, while Vedanta argued that the amended provision should not govern the commercial bauxite sales covered by its LTL arrangement.
Court Upholds Statutory Pricing Mechanism
The High Court upheld OMC’s computation of the Average Sale Price under Section 17-A of the MMDR Act read with Rule 45 of the relevant rules. The bench therefore declined Vedanta’s request to restore the earlier pricing formula and vacated the interim orders passed during the proceedings.
Promissory Estoppel Argument Rejected
Vedanta had also relied on the doctrine of promissory estoppel, arguing that the state should honour the assurances on which the company said it had based its investments. The court held that promissory estoppel cannot compel the state or its instrumentalities to act contrary to statutory provisions or create an enforceable commercial right over natural resources held in public trust.
What the Verdict Means for Vedanta
The ruling means that Vedanta cannot rely on the terminated 2004 arrangement to demand bauxite at the earlier pricing formula. The company’s present bauxite supplies remain governed by the applicable agreements and statutory pricing framework. A Vedanta spokesperson has said the company is evaluating the order and the legal recourse available to it, while stating that the judgment does not impact its bauxite supply.
A Significant Development for Odisha’s Aluminium Sector
The judgment is significant for Odisha’s mineral and aluminium industries because bauxite is a key raw material for alumina production. The case also highlights the impact of changes in mining legislation and government mineral-allocation policies on long-term commercial arrangements between state-owned mining entities and industrial companies.
