Supreme Court admits appeal against Gujarat HC ruling on Sardar Sarovar bond

New Delhi: The Supreme Court on Friday admitted an appeal against a Gujarat high court ruling which declared a state bond redemption law illegal.

On 15 January, the Gujarat high court declared the Sardar Sarovar Narmada Nigam (Conferment of Power to Redeem Bonds) Act, 2008, which contained a provision for redemption before maturity, illegal and unconstitutional. This Gujarat government law enabled the state-owned Sardar Sarovar Narmada Nigam Ltd (SSNNL) to redeem the deep discount bonds issued by it in public interest.

The high court found that the SSNNL Act was outside the purview of the state government’s legislative powers and that there were central laws to regulate the issue.

Both the Gujarat government and the SSNNL appealed this decision before the apex court.

A bench comprising justices P.C. Ghose and Amitava Roy admitted the appeal saying that the issue needed to be heard.

SSNNL is a special purpose vehicle, incorporated as a joint venture among four states—Gujarat, Madhya Pradesh, Maharashtra and Rajasthan—in order to construct a terminal dam, Sardar Sarovar dam, over the Narmada river.

For the project, SSNNL came out with a public issue of secured redeemable deep discount bonds of a face value of ₹ 1,11,000 each to be issued at a discounted price of ₹ 3,600 each with a maturity period of 20 years. SSNNL raised ₹ 256.90 crore.

The SSNN (Conferment of Power to Redeem Bonds) Act was introduced and passed in 2008.