Vedanta gets interim relief as Indian court stays state's land allotment cancellation

NEW DELHI (Reuters) - An Indian court on Wednesday ordered an interim stay on the cancellation of land allotted for expansion of Vedanta's (VED.L) south Indian copper smelter, in a relief to the conglomerate whose unit was shut on environmental grounds.

The Tamil Nadu state government ordered a permanent closure of the plant, cancelled land allocated for expansion and disconnected power supply to the smelter in May following protests that turned violent and culminated in the police opening fire, killing 13 protesters.

"It appears the impugned order is passed as a knee jerk reaction," the Madurai bench of the Madras High Court said in an order which provided interim relief to Vedanta. The case will be heard again on Oct. 25.

Protesters say the smelter was causing air and water pollution, and a risk to fisheries, and the plant has not been reopened ever since it was shut. India's junior minister for water resources told lawmakers in July that the ground water in the area where Vedanta's smelter is located contained heavy metals exceeding acceptable limits for drinking water.

Vedanta says the protests are based on false notions.

The company has sought a permanent injunction against the Tamil Nadu state government from interfering with the operations of its copper smelter, and India's environment court in August ordered an independent probe to decide whether to allow Vedanta to reopen its copper smelter.

"We are happy that the high court has only considered the facts in the case and granted a stay to the state's order which was purely made considering the people's emotions," P Ramnath, Chief Executive Officer of Vedanta Ltd's (VDAN.NS) copper unit Sterlite Copper said in a statement.

(Reporting by Sudarshan Varadhan in New Delhi; Editing by Shounak Dasgupta)