Tata Power appeal

LEGAL DIGEST

The Supreme Court has admitted the appeal of Tata Power Company (TPC) Ltd against an order of the Appellate Tribunal for Electricity asking it to refund about Rs 451 crore to Reliance Energy Ltd (REL) paid as standby charges.

Earlier, the court had stayed the order till January 31. The court will hear the case finally next week. The Tribunal had asked TPC to refund Rs 451 crore to REL paid by the Anil Ambani group firm as standby charges for electricity supply in Maharashtra.

Senior counsel K K Venugopal for REL submitted before a bench headed by Justice BP Singh that it had a money decree from two courts, including the Bombay High Court, but it was still not getting the payment from TPC.

Opposing the TPC offer of giving a bank guarantee till the case was decided, the counsel said that at least half of the due amount should be paid. The court had suggested a few interim arrangements, but since they were not acceptable to the parties, it posted the case for final hearing next week.

Arbitration clauses

The issue of interpretation of arbitration clauses in contracts has come up again in the Supreme Court in a case involving Krishna Bhagya Jala Nigam Ltd of Andhra Pradesh.

Earlier a three-judge bench had referred the question to a constitution bench in a case involving the Karnataka government. In the Andhra Pradesh case, there was a slew of disputes between the water corporation and a contractor who undertook to build a major lift irrigation project. The contractor asked the chief engineer to be the arbitrator under the Arbitration and Conciliation Act.

However, the later declined on the ground that agreement did not provide for arbitration. When the corporation moved the high court, it asked the chief engineer to arbitrate. It gave an award against the corporation. It moved an appeal in the high court in vain.

The Supreme Court also rejected its contention that there was no arbitration clause in the contract. However, the court modified the orders to grant certain reliefs to the corporation.

Sebi code

Hardy Oil and Gas Plc has moved the Supreme Court alleging violation of SEBI (Securities and Exchange Board of India) Takeover Code by Burren Energy India Ltd (BEIL) and Unocal Bharat Ltd (UBL).

The court clubbed the matter with other similar petitions pending before it. Hardy had challenged the Securities Appellate Tribunal's (SAT's) order that set aside a ruling of SEBI. The market regulator had in August last year slapped a penalty of Rs 25 lakh each on BEIL and Unocal Bharat for violating SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

Burren had in 2005 acquired 100 per cent stake in Unocal Bharat from its parent Unocal International Corp. With this, Burren indirectly acquired 26.01 per cent stake in Hindustan Oil Exploration Co (HOEC), which was till then held by UBL.

The regulator had passed the order on a complaint by Hardy Oil, which held 8.5 per cent in HOEC. But after the SEBI order had been set aside by SAT, Hardy Oil filed a plea in the Supreme Court.

Burren and Unocal International had entered into a share purchase agreement on February 14, 2005 and made a public announcement a day later. On February 14 itself, Burren appointed two nominees - Finian O'Sullivan and Atul Gupta - on the Board of Directors of both UBL as well as HOEC.

However, SEBI had observed that since the open offer of HOEC was not complete till February 14, BEIL and UBL were not entitled to make such changes as per regulations. SEBI's order was challenged by Burren and UBL in SAT, which dismissed the regulator's order.

SAT had also held a public announcement need not be prior to acquisition of shares and does not apply to agreements between foreign firms.