SC verdict in favour of Bengal govt

The Supreme Court on Friday 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.

The ownership battle between the principal shareholders of HPL — West Bengal government and Purnendu Chatterjee — dates back to 2005, when the Left Front was in power. Since then, the government has changed and so has the relationship between Chatterjee and the state.

“I will first study the judgment and then discuss it with the chief minister. I do not want to comment before that,” said Commerce and Industry Minister Partha Chatterjee, after emerging from a meeting with West Bengal Industrial Development Corporation (WBIDC) officials on the HPL judgment.

About a month before, Chief Minister Mamata Banerjee had said Chatterjee was framed by the earlier government about “shares and governing body issues”. After the regime change, Purnendu Chatterjee was also made the chairman on an interim basis.

“The state government has taken certain initiatives (like valuation) which are not going to be impaired by the court order. Those initiatives will now have to be taken to its logical conclusion,” an HPL official said. Chatterjee was not available for comment.

The Left Front seemed happy with the verdict. “I am happy that the judgment is in favour of the state government. I hope HPL’s issues will be resolved now and the company will do well,” said former state commerce and industry minister Nirupam Sen.

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 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 per cent stake.

Partha Chatterjee said the state government would continue with the valuation process.

The new government, which is interested in offloading its 51 per cent in HPL, has appointed an investment banker to work out the valuation. But 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 The Chatterjee Group (TCG).

The price, however, may not be acceptable to TCG. “That valuation was done at a time when the company had made profits five years in a row. In the last three years, cumulative losses of HPL stand at Rs 1,000 crore. Market conditions have also changed for the worse,” said the HPL official.

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.