Delhi High Court Upholds ₹29.23 Crore Encashment Of Vedanta's Performance Bank Guarantee For Missing CMDPA Milestones

Justice Amit Sharma on 2nd December, 2025 rejected the Writ Petition of Vedanta Limited, holding that it received the clearance “beyond the stipulated period” and hence, the nominated authority, Ministry of Coal, was justified in imposing the financial consequence as per the conditions stipulated in the milestone agreement.

The dispute arose out of a Coal Mine Development and Production Agreement (CMDPA) between Vedanta Ltd, a successful bidder for the Radhikapur (West) coal block and the Ministry of Coal entered on 11th January 2021, under which a vesting order was issued to Vedanta on March 3rd, 2021. Issue arose when conditions of the agreement consisting of a chain of milestone events including completion of environmental clearance within 18 months of vesting, was not complied with.

As Vedanta obtained the clearance on January 23, 2023 with the deadline being expired on September 3rd, 2022, the authorities claimed that this delay justified the appropriation order of encashing 10% of bank guarantee. Aggrieved, Vedanta filed a Writ petition in the High Court seeking to quash the order and for an extension in the milestone time-period.

The central issue that the High court decided was the maintainability of the writ petition, given the contractual nature of the dispute and a pre-existing statutory appeal mechanism for this issue.

Senior Counsel for the Petitioner, Mr. Nidhesh Gupta and Mr. Prashanto Chandra Sen, argued that such an order violates the principles of natural justice principles by inserting an "extraneous and irrelevant consideration" that was not included in the original Show Cause Notice. Additionally, they also sought revision of the “zero-date” stating that the delay arose out of factors beyond its control and should be excluded from time calculation, pointing to the re-fixation of boundary coordinates and elephant-sensitive zone classification.

Mr. Chetan Sharma, Additional Solicitor General (ASG) countered that the imposed penalty was "in strict accordance with the provisions of the CMDPA," highlighting that the clearance was not complied as per the 18 months' timeline stipulation. The ASG also advocated for the availability of appropriate statutory remedy under Section 27 of the CM (SP) Act.

The Court, presided over by Justice Amit Sharma on 2nd December 2025, upheld the Government's appropriation order, stating that environmental clearance "ought to have been obtained within eighteen months" of vesting and “failure to comply with the efficiency parameters” was proven.

Additionally, the Court also pointed out that the petitioner had voluntarily issued an assurance on August 12, 2024, to have the mine operational by June 3, 2025, and that the Scrutiny Committee's recommendations and findings were never questioned. The Court ruled that the petitioner's case did not fit within the restricted limitations that allow courts to prevent the invocation of unconditional bank guarantees. It noticed that the petitioner was already aware of the "force majeure" claim and the subsequent concerns raised when it issued the undertaking.

In relation to contentions involving boundaries, surveys, or ecological status, the court ruled that they could not supersede contractual dates. Highlighting the availability of a specific statutory remedy, Justice Sharma stated that "disputed questions of fact in respect of provisions of the CMDPA cannot be decided by this Court in the present jurisdiction."

Placing reliance on Radha Krishnan Industries v. State of Himachal Pradesh, The Court concluded that it was "not inclined to exercise its jurisdiction under Article 226 of the Constitution of India as the petitioner has an alternate efficacious statutory remedy as provided under Section 27 of the CM (SP) Act, 2015”.

The Court also found no breach of natural justice, as Vedanta had been issued notices, allowed to reply, given a personal hearing, and had its representations evaluated.

Consequently, the High Court disposed of the writ petition, directing Vedanta Limited to approach the concerned learned Tribunal (Talchar, Odisha) within 10 days. The interim status quo order on the Performance Bank Guarantee also stands extended for ten days, noting that the Bank Guarantee "should be kept alive" during that time.

Case Title: Vedanta Limited v. Nominated Authority, Ministry of Coal, Government of India and Others

Case No.: Writ Petition (Civil) 10686 of 2025

Coram: Justice Amit Sharma

Pronounced On: 2 December 2025

Appearances: For Petitioners- Nidhesh Gupta and Prashanto Chandra Sen, Senior Advocates, with team of counsel; For Respondents- Chetan Sharma, Additional Solicitor General, with supporting counsel.