INDIA BUSINESS WORLD SEPTEMBER (16^th - 30^th) 2007
The Month that was ...

HIGH COURT SETS ASIDE COMPANY LAW BOARD ORDER ON HALDIA PETROCHEMICALS SHARE TRANSFER TO TCG

JUSTICE Jayanta Kumar Biswas of Calcutta High Court has set aside the Company Law Board (CLB) judgement that had directed the West Bengal government and WBIDC to divest their stakes in Haldia Petrochemicals (HPL) to the Purnendu Chatterjee-controlled TCG Group.

It may be recalled that Mr Purnendu Chatterjee, through his group companies Chatterjee Petrochem (Mauritius), Winstar India Investment , India Trade (Mauritius) and Chatterjee Petrochem (India) had moved the CLB seeking majority control of HPL.

CLB chairman S Balsubramanian had in his judgment delivered on January 31, directed the West Bengal government to exit from HPL by selling its stake to the TCG group. The CLB order had further asked the West Bengal Industrial Development Corporation (WBIDC) and the West Bengal government to disinvest their 52 crore shares in favour of Mr Chatterjee and his group at the rate of Rs 28.80 per share or a price as may be determined by the appointed valuer. Mr Sudipto Sarkar had appeared before the CLB on behalf of Mr Chatterjee and Mr Amar Gupta on behalf of the State of West Bengal and WBIDC.

Challenging the order passed by CLB, WBIDC and the West Bengal government had filed separate appeals in Calcutta High Court which were specially assigned to Justice Jayanta Biswas.

Mr Samaraditya Pal, Mr Ratnako Banerjee and Mr D.Basak appeared on behalf of the West Bengal government while Mr PC Sen, Mr Ranjan Bachawat and Mr Sanjay Ginodia, appeared on behalf of WBIDC. Mr Anindya Mitra and Mr Sudipto Sarkar, in turn, appeared on behalf of the TCG Group.

By an order passed on February 16, Justice Biswas had stayed the CLB order and directed parties to maintain status quo as was on the date of CLB order.

The high court had accepted the submission made on behalf of appellants that proceedings before the CLB under Sections 397, 398 and 399 could only be for mismanagement and oppression. Lawyers, appearing on behalf of the state govt and WBIDC, have all along maintained that the CLB has no jurisdiction to grant specific relief for enforcement of contract.

They had also submitted in the course of hearings that despite having come to a finding that there was no case of mismanagement or oppression, CLB has in effect ordered specific performance of an agreement for transfer of 155 million shares of WBIDC. This had also been done on the ground that there was legitimate expectation, which was neither be pleaded nor be agitated in case of dispute between private parties.

In the course of previous hearings, eight cross appeals (objections) were filed by the TCG Group and separate appeals also filed by them and another separate appeal by Industrial Development Bank of India (IDBI).

By the judgement delivered, the appeals filed by the West Bengal government and WBIDC were allowed and the appeals and cross-objections filed by TCG Group were dismissed. Prayer made for stay of the operation of the judgment delivered was also rejected.