Supreme Court dismisses Chatterjee appeal in HPL ownership dispute

03-Oct-11

The Supreme Court on India has dismissed the appeal by Purnendu Chatterjee-led Chatterjee Petrochem Limited and Chatterjee Petrochem (Mauritius) Co in the ownership dispute of Haldia Petrochemicals Limited. The ruling has reiterated that the state government has a majority holding in HPL and the onus is now on the Trinamool Congress-led government to make the next move, as per Business Standard. The legal battle between the two promoters started in August 2005 when the TCG group went to CLB against the preferential allotment of HPL equity to Indian Oil Corporation (IOC). IOC had paid HPL Rs 150 crore for a 7.5% stake. The apex court judgment has upheld the earlier judgement of the Calcutta High Court, which had overruled a Company Law Board order in favour of TCG. The new government is interested in offloading its 51% stake in HPL. Irrespective of the valuation, the state government may find it difficult to sell its stake at less than Rs 28.80 a share, the price at which the earlier Left Front government had made a “take or leave” offer to TCG. The price, however, may not be acceptable to TCG as the valuation was done five years ago when the company had made profits. In the last three years, cumulative losses of HPL stand at Rs 1,000 crore amid worsening market conditions. According to the agreement with the earlier government, Purnendu Chatterjee would have to be given the first rights of refusal, in case the government decides to sell its stake. However, if Chatterjee does not agree with the valuation, the government is free to sell its shares to a third party. It has widely been speculated that Mukesh Ambani-led Reliance Industries was interested in HPL. Ambani had come down to meet former chief minister Buddhadeb Bhattacharjee and Sen, soon after the assembly elections in 2006. The interest was revived after the Trinamool Congress-led government was sworn in earlier this year.