TCI sues CIL , directors for losses on coal pricing

Cites failure on performance of duties and also asking for a compensation on the losses that they suffered

London-based The Children's Investment Fund (TCI) has today filed a law suit against the directors of Coal India Ltd (CIL) at Calcutta High Court, citing failure on performance of duties and also asking for a compensation on the losses that they suffered.

The suit also names the government of India as a party stating that it has put pressure on the firm. In August, TCI had filed a writ petition at the Delhi High Court over the interference of the Centre in the functioning of CIL, instructing the firm to revise the price hike made in December 2011. A top CIL official confirmed the development at Calcutta High Court and said that while both the cases are substantially same, TCI has claimed a compensation from CIL now.

Oscar Veldhijzen, partner, TCI confirmed  over telephone that the fund has filed a law suit in the Calcutta High Court against the directors of Coal India for the breach of fiduciary duties and failure of board to raise coal prices to the market levels.

“They also have failed to stop the government’s move to reverse the price hike in January. We estimate the total losses due to this at Rs 215000 crore ($43 billion). These profits belong to the people of India.” TCI, which owns 1.01 per cent (63,599,991 shares), is the biggest foreign investor in the Kolkata-based coal major.

Veldhuijzen added that the politicians are not keen to bring the coal prices to market levels because it will lead to less scope for corruption. “People may be taking comfort from the fact that the court cases in India take a long time. But, we are willing to fight.”

If we cannot get it done in a friendly manner, we are ready to do it in an unfriendly way, he added. “The case could bankrupt the directors. It is better for them to correct their decisions in a manner that benefits all minority shareholders.”

The London-based discretionary investment manager had also raised the scrapping of the system of fuel supply agreements claiming that it will hurt the coal major’s profit.