London-based The Children’s Investment Fund (TCI) filed on Friday a lawsuit against the directors of Coal India Ltd (CIL) at the Calcutta High Court. TCI charged them with failure on performance of duties and asked for compensation on the losses it suffered.
The suit has named the Indian government as a party, stating it had put pressure on the firm. In August, TCI had filed a petition at the Delhi High Court over the interference of the Centre in the functioning of CIL, instructing the firm to revise the price rise made in December 2011. A top CIL official confirmed the development and said while both the cases were similar, TCI had claimed compensation from CIL for now.
While the date of hearing at the Calcutta High Court is December 12, the pending case at Delhi High Court will be heard on December 7.
Oscar Veldhuijzen, partner, TCI, confirmed over telephone that the fund had filed a suit in the Calcutta High Court against CIL directors for the breach of fiduciary duties and failure of the board to raise coal prices to the market levels.
“They also have failed to stop the government’s move to reverse the price rise in January. We estimate the total losses due to this at Rs 2,15,000 crore ($43 billion). These profits belong to the people of India.” TCI, which owns 1.01 per cent (63,599,991 shares), is the biggest foreign investor in the Kolkata-based coal major.
Veldhuijzen added that politicians are not keen to bring the coal prices to market levels, because it will lead to less scope for corruption. “People may be taking comfort from the fact that the court cases in India take a long time. But, we are willing to fight,” he said.
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He added that the case could bankrupt the directors. “It is better for them to correct their decisions in a manner that benefits all minority shareholders,” he said.
The TCI had also raised the issue of scrapping of the system of fuel supply agreements, claiming that it will hurt the coal major’s profit.