Cancel Adani deal now to make a strong case, legal team urges

Foreign legal experts have urged the government to immediately cancel the controversial Adani Power agreement, warning that continued delay could seriously weaken Bangladesh's position in any arbitration at the Singapore International Arbitration Centre (SIAC).

Sources in the Power Division and members of the National Review Committee (NRC) told The Business Standard that senior foreign counsel, including King's Counsel Farhaz Khan, conveyed this advice in the first week of January after reviewing evidence collected by the committee and vetted by international legal specialists.

Infographics: TBS

Officials familiar with the deliberations said the central concern is that prolonged inaction – despite public allegations of corruption and fraud – could undermine Bangladesh's credibility if the dispute proceeds to a legal battle.

Delay may signal contract acceptance

Power Division officials said under English law, a failure to act promptly against alleged corruption can be interpreted as tacit acceptance of a contract.

"If a party claims to have strong evidence of bribery or fraud but continues to perform the contract for a long period before seeking legal remedies, arbitrators may see that as contradictory conduct," a senior official said. "It can suggest that the party itself lacked confidence in its evidence."

Professor Mushtaq Husain Khan, an NRC member and economist at the University of London, said the committee has gathered sufficient material to establish fraudulent behaviour in the deal process.

"Given the merits of the Adani case, we believe there is enough evidence to investigate fraud," he said. "Based on these findings, the legal expert team advised the government to begin cancellation proceedings as soon as possible."

The NRC was formed after the change of government to review major power sector contracts signed under the previous Awami League administration, with the Adani agreement among the most scrutinised.

Legal advice remains privileged

NRC members said the detailed opinions of Farhaz Khan and other foreign lawyers remain protected under legal professional privilege.

"The King's Counsel's advice is privileged. It was provided to the government, not for public disclosure," an NRC member said.

Under English law, legal professional privilege shields confidential communications between lawyers and clients from disclosure, enabling candid legal advice. However, officials said the overall direction of the advice is clear: if Bangladesh intends to rely on corruption as a core argument, it must act swiftly.

Estoppel risk if power continues to flow

Officials also warned that Bangladesh could face the doctrine of estoppel if it continued to receive electricity from Adani while asserting that the deal was corrupt.

"Publicly alleging corruption but continuing to accept power weakens the case," a Power Division official said. "Adani's lawyers could argue that Bangladesh affirmed the contract through its conduct."

Judicial estoppel prevents a party from adopting contradictory positions at different stages of legal proceedings. In practical terms, continued performance of the contract could bar Bangladesh from later claiming that the agreement was void due to corruption.

"The obvious question from arbitrators would be: if the deal was so corrupt, why did Bangladesh not challenge it earlier?" another NRC member said.

'Void from inception' – but only if acted upon

Legal advisers have also pointed to the doctrine of void ab initio under English law, which holds that contracts tainted by corruption are invalid from the outset.

"If a contract is proven to be corrupt, it is void from inception," Prof Mushtaq said. "But if a party knows about the corruption and continues with the contract, that behaviour can be treated as affirmation."

He added that the appropriate legal course, once evidence is established, is cancellation, after which the dispute would move to arbitration if challenged by Adani.

Evidence, officials and alleged money trails

As part of its investigation, the NRC – working with the Anti-Corruption Commission (ACC) – has questioned officials from multiple agencies involved in negotiating and approving the deal.

According to the committee, many key officials have already left the country. Those still in Bangladesh have been questioned and have pledged cooperation.

"They have assured us they will submit all relevant documents and assist the investigation," an NRC member said.

Professor Mushtaq said the committee has already compiled substantial evidence, with more documents continuing to surface.

"We consulted legal experts, whistle-blowers and private investigators, all of whom confirmed that there is enough material to initiate a civil case alleging corruption," he said. "These findings were examined by international experts and later validated by King's Counsel."

NRC findings allege that officials involved in key stages of the deal travelled abroad shortly after approvals were granted, and that some later established overseas companies where funds allegedly linked to Adani were deposited.

The committee says the deal process began around 2015 and culminated in the signing of the power purchase agreement (PPA) in 2017, with foreign trips allegedly occurring after each critical approval stage.

A controversial deal

The Adani Power agreement was signed in November 2017 between the Bangladesh Power Development Board (BPDB) and Adani Power (Jharkhand) Limited. Power supply from the Godda plant began in 2023.

From the outset, the deal has drawn criticism over its pricing structure, coal sourcing arrangements and the absence of competitive bidding. Independent experts and NRC members argue that Bangladesh is paying a higher tariff than comparable coal-fired projects, adding pressure on foreign exchange reserves and consumer electricity prices.

What comes next

Power Division officials said that if the next government follows the legal advice and cancels the agreement, Bangladesh would then proceed to arbitration if Adani contests the decision.

"Once the deal is cancelled, we will formally initiate arbitration," Prof Mushtaq said.

Officials stressed that time is critical.

"The longer we delay, the greater the legal and financial risks," an NRC member said. "The window for decisive action is narrowing."

Adani's response

In an email response sent via 5W Communications, Adani Power said it was unaware of any such legal advice and had received no communication from BPDB.

"Adani Power is not in a position to comment on advice that may have been provided to the Bangladesh government by its legal counsel," the company said, adding that it would continue to honour its supply commitments.

The company said it values its relationship with Bangladesh and described itself as a "reliable energy partner", noting that it maintained uninterrupted power supply even during periods of delayed payments when other imported coal-based producers curtailed operations.

"This reflects our unwavering commitment to Bangladesh's energy security and to strengthening the enduring partnership between our two nations," the statement said.