State retains control of Haldia Petro

The government of West Bengal will retain management control of Haldia Petrochemicals Ltd (HPL) after the Calcutta High Court today stayed the order of the Company Law Board (CLB).

The CLB had directed the government to transfer HPL's 155 million shares to The Chatterjee Group (TCG), which would have given it management control.

Justice Jayanta Biswas passed the interim order after hearing counsels of the West Bengal Industrial Development Corporation (WBIDC) and TCG.

The court said the position prior to the passing of the CLB order on January 31 should be maintained until further orders or disposal of the appeal and fixed February 28 for the next hearing.

Till now, a team appointed by the West Bengal government was in charge of HPL's management.

Counsels appearing on behalf of the petitioners, i.e., GoWB and WBIDC, sought a stay on the CLB order arguing that transfer of shares being held by them along with 520 million shares would give TCG almost total ownership control of the company.

Countering this, TCG lawyers argued that in the CLB order it was mentioned that TCG and others held 58 per cent of HPL shares, WBIDC 37 per cent, the Tatas three per cent and others two per cent.

S Pal and PC Sen led the team for the petitioners, Bimal Chatterjee for HPL and Sudipto Sarkar appeared for TCG.

TCG counsels maintained that 155 million shares had been transferred by WBIDC in 2004, following which collective shareholding by TCG and others stood at 58 per cent.

The CLB, in its order, had directed transfer of 155 million shares to Chatterjee Petrochem (Mauritius) Company and other investors at Rs 10 per share.

The January 31 CLB order, which also asked both sides to appear before it for determining a mutually acceptable valuer, stood infructuous since the HC had given an interim stay on it.

The CLB order had also upheld the allotment by HPL of 150 million shares to Indian Oil Corporation at Rs 10 per share.

Both the sides maintained that the share transfer issue would have to be adjudicated by the court.

Shortly after passing of the CLB order, TCG had approached the West Bengal government for an amicable solution to the HPL imbroglio.

The state government later decided to move the high court against the order.

CLB had in effect ordered the WBIDC to exit HPL by selling its shares to the TCG.

CLB also asked WBIDC to transfer another lot of 520 million shares at Rs 28.80 or a price determined by a independent valuer.

CLB set a deadline of February 28 for TCG to purchase the 155 million shares and 45 days from the date at which a valuer fixed a price to buy the rest 520 million shares.

If TCG failed to buy those shares within the timeframe, WBIDC would buy the shares of TCG.

If shares were transferred according to the CLB order, TCG would hold a 52 per cent (76 crore shares) stake in HPL, which has a paid up equity of Rs 1,460 crore (146 crore shares of Rs 10).

TCG sources had told Business Standard earlier that the CLB order had gone overwhelmingly in favour of WBIDC as TCG was directed to pay for part of its shareholding at Rs 28.80 per share in a company that it had promoted.