Explainer: What the apex court stay in the Adani ports land case means for the company

The Navinal villagers in Mundra (Kachchh district) opposed the 2005 government resolution to allot the grazing land for industrial use.

On July 10, the Supreme Court of India stayed the Gujarat High Court’s order in the matter of Adani Ports & Special Economic Zone Ltd (APSEZ), ordering the state government to  recover nearly 108 hectares of grazing land allotted to the company in 2005 near the Mundra port.

This development provides relief to APSEZ as the company has been making plans to expand the Mundra port. The company has plans to double the capacity of the port by investing Rs 45,000 crore, according to media reports. Moneycontrol explains the importance of the apex court stay and what it means for APSEZ.

Who is opposing the land allotment to APSEZ and why?

The land was allocated to APSEZ in 2005 by the state government for commercial purposes. Residents of a nearby village, Navinal, filed a case in 2011 opposing the decision taken by the Gujarat state government saying of the total 276 hectares of grazing land, 231 hectares was allotted to APSEZ that left villagers with only 45 hectares of grazing land. The villagers had argued that the land allotment harmed their livelihood as the land supported their cattle. They also opposed the 2005 government resolution to allot the grazing land for industrial use.

What happened in the Gujarat High Court?

The Gujarat High Court on July 5 ordered the state government to claw back the 108 hectares of land which was given to APSEZ and make this available for grazing purposes. This was a major setback for APSEZ given its expansion plans for the Mundra port. However, the court allowed status quo in the matter until a final decision in this regard was reached by the Supreme Court. Now, the apex court has stayed the July 5 order of the Gujarat High Court.

How will the case impact the Adani Group?

Mundra is a key port for APSEZ, accounting for significant cargo volumes. And even within the Adani Group, APSEZ is a key entity as it is the second most profitable firm in the group after Adani Power.In FY24, Adani Ports reported a PAT of Rs 8,266 crore and a revenue of Rs 26,711 crore. As per the annual report FY24, APSEZ reached 420 MMT, recording high cargo volumes. It also undertook acquisitions of the Gopalpur and Karaikal ports.

Has environment clearance been a challenge for APSEZ before?

In January 2014, 12 manufacturing units of APSEZ in Mundra were shut down due to the lack of green clearance. It was stated by the Gujarat High Court then that they will not be allowed till the Ministry of Environment & Forest (MoEF) grants them environment clearance. However, on January 28, 2014 the Supreme court permitted them to continue their operations, but barred further construction activity. The apex court also upheld the state high court’s order for MoEF to comply with the directions and to consider the grant of environmental clearance to the SEZ.