A decision on whether the battle for shareholding in Haldia Petrochemicals (HPL) would be dragged to the International Court of Arbitration (ICA) is to be be taken this month, following a Supreme Court order directing the high court to dispose the case in December.
“The Supreme Court has asked the lower court to dispose the matter within this month,” confirmed HPL Managing Director Sumantra Chowdhury. A ruling in favour of The Chatterjee Group against another major shareholder, the West Bengal government, may drag the case to ICA, following a long legal battle in the Indian courts. The Supreme Court has also approved a petition by the TCG, challenging an interim stay by the Calcutta High Court on TCG approaching ICA.
However, the firm’s board is likely to take up a resolution on Wednesday for the conversion of a part of its long-term debt into equity. “When the battle for shareholding is before the court and supposed to come before the ICA soon, the board is not supposed to take this action. The firm’s financial woes are created by the government. It is not availed of tax credits worth Rs 775 crore in various categories,” an HPL source said.
Chowdhury indicated that no such agenda for conversion of debt into equity was on the agenda of the board meeting as of now. TCG had filed the arbitration with the International Chamber of Commerce (ICC) headquartered in Paris, earlier this year. The ICC’s International Court of Arbitration is the world’s leading institution for resolving international commercial and business disputes. The total number of cases handled by the Court since it was founded in 1999 is more than 17,000. In 2010, 793 cases were filed, involving 2,145 parties from 140 countries.
Cases are filed under this body, if the parties are from different national, cultural and legal backgrounds and want to avoid litigation as they fear bias in a separate country. TCG had approached the court as it came as an NRI investor and the agreement is of international standard. Against this, HPL had approached the High Court seeking a stay on TCG’s move to take the company to ICA.
According to HPL’s financial statement, there is a massive increase in short-term financial borrowings to Rs 951.7 crore in 2011-12. “Moreover, the state government has forcibly kept on operation below 40 per cent of installed capacity, while it has incurred an accumulated cash loss of about Rs 900 crore in the current financial year,” the official added.
In 2011, the apex court had dismissed a petition by the TCG against a decision by the Calcutta High Court, that set aside a CLB directive asking the state government to exit the project by selling its stake to TCG.
