Financial Daily from THE HINDU group of publications
Thursday, Nov 18, 2004
Financial Daily from THE HINDU group of publications Thursday, Nov 18, 2004 |
|
|
|
|
|
Home Page
-
Courts/Legal Issues Industry & Economy - Power TNEB dues: PPN's 2 US partners go for arbitration Majority shareholders vote against the decision N. Ramakrishnan
Chennai , Nov. 17 TWO US power companies with a joint 46 per cent equity in PPN Power Generating Co Ltd have gone to an international arbitrator over non-payment of dues and arrears by the Tamil Nadu Electricity Board, a decision which has not found favour with the majority shareholders and lenders. The company plans to approach the Supreme Court with an anti-suit injunction. The two US power companies - PSEG Global and El Paso Energy Corporation - initiated arbitration proceedings before the International Court of Arbitral Tribunal seeking to recover Rs 468.88 crore owed to PPN Power by the electricity board as on January 31, 2004. PPN Power Generating Co Ltd, which runs a 330 MW power plant at Pillaiperumalnallur in Tamil Nadu, is questioning the rights of these two companies to go in for arbitration when the company's board, by a majority vote, had decided against a proposal to seek arbitration. It plans to file a special leave petition in the Supreme Court after its appeal for an anti-suit injunction was dismissed by Mr Justice K. Govindarajan and Mr N. Kannadasan of the Madras High Court. Mr Soli Sorabjee, former Attorney General, is likely to appear for the company in the Supreme Court. An anti-suit injunction is filed to seek a court order directing a person (or, in this case, a company or companies) not to proceed with litigation in a foreign court. It is learnt that the Tamil Nadu Electricity Board (TNEB) has appointed a former judge of the Madras High Court to represent it in the arbitration proceedings, as and when they are held. PSEG Global and El Paso Energy Corporation had initiated arbitration proceedings against TNEB to recover the amount due to the company, especially when the electricity board had not complied with the payment security mechanism contemplated under the power purchase agreement it signed with PPN Power. The two companies had proposed resolutions in a meeting of the board of directors of PPN Power Generating Company held in March 2004, to invoke the alternate dispute resolution provisions under the power purchase agreement. The resolutions were taken up for vote and the majority of the directors of the board refused to invoke legal remedies available to the company and the resolutions were defeated by a vote of 8:5. PPN Power Generating Company's arguments before the Madras High Court were that TNEB was the sole purchaser of power produced by it and any action against the electricity board would ruin the company and affect its relationship with the electricity board. The company said its decision not to proceed against the TNEB was a commercial decision considering the divergent opinions before it. The company also questioned the right of minority shareholders to file for arbitration. The two US power companies said they were filing for arbitration only to protect the interests of PPN Power Generating Company, and if the proceedings were not initiated in time, they would become time-barred. PPN Power argued that when the company was not willing to resort to arbitration proceedings on the basis of commercial decisions, minority shareholders could not be allowed to initiate arbitration proceedings. The company's counsel argued that even other creditors of the company were supporting the company's decision in this regard. The High Court ruled that PPN Power Generating Company had not made out a case for anti-suit injunction and so "the order of the CLB (Company Law Board) rejecting the prayer for anti-suit injunction need not be interfered with." The CLB passed is order in July 2004.
More Stories on : Courts/Legal Issues | Power
Article E-Mail :: Comment :: Syndication :: Printer Friendly Page
|
Stories in this Section |
|
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |
Copyright © 2004, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line
|