High court reserves judgement on petition filed by IDBI in HPL case

12-May-06

The CLB, while allowing allotment of 7.5% shares to IOC in HPL, restrained the company from allotting shares worth Rs 135 crore to IDBI till the final disposal of the case. The Delhi High Court has reserved its judgment on the petition filed by the Industrial Development Bank of India (IDBI) against the Company Law Board order deferring allotment of Haldia Petrochemicals (HPL) shares to the financial institution. Under IDBI's agreement with HPL, the company was to issue shares equivalent to the money lent for corporate debt restructuring. However, this was deferred because if more shares are allotted to IDBI as per the CDR package, TCG would become a minority stakeholder. IDBI argued that its agreement with HPL should remain out of the CLB's purview as it has nothing to do with the dispute between The Chatterjee Group (TCG) and West Bengal Industrial Development Corporation. Though IDBI was not made a party to the proceedings at the CLB, the board should have restrained from passing an order deferring allotment of HPL shares to IDBI. However, TCG argues that the writ petition is not maintainable as IDBI should have moved Calcutta High Court within 60 days of CLB's passing the August 4 order. IDBI is the principal lender in a consortium of 52 financial institutions. HPL has a debt burden of Rs 3,000 crore. IDBI had contended that the CLB had acted beyond the scope of the petition as there was no prayer restraining issuance of shares in its favour.