MSEB Arm Contests Company Law Board Judgment On Dabhol Board

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Mumbai, April 6: : The Maharashtra Power Development Corporation Limited (MPDCL), an arm of the Maharashtra State Electricity Board (MSEB) in a writ petition before the Bombay High Court, has challenged the Company Law Board’s (CLB) judgment with regard to the reconstitution of the board of the troubled Dabhol Power Company (DPC).

MPDCL, which has picked up 30 per cent stake in Dabhol phase-I on behalf of MSEB, has strongly opposed the CLB’s order upholding the appointment of Peter Freeman as the non-shareholding director on DPC’s board.

MSEB sources confirmed that MPDCL has filed a writ petition challenging the CLB order, the portion of which was not in the interest of MSEB. These sources told FE that DPC, GE, Bechtel, IDBI, ICICI have been made defendants. The high court has not yet slated hearing on MPDCL’s petition.

The CLB in its order delivered last week has already termed the decisions taken by DPC’s board on June 4, 2002 as illegal. The DPC board had decided to proceed against Maharashra government in the London arbitration tribunal, appoint advocates to prusue arbitration. However, CLB had rejected the MSEB’s plea for the appointment of in all two directors on DPC’s board. MPDCL has prayed that its one more director be appointed as shareholding director on DPC’s board. Under the reconstituted DPC board, there would be in all five directors representing GE (which holds 10 per cent stake in DPC), Bechtel (10 per cent stake), Industrial Development Bank of India (non-shareholding), MPDCL (non-shareholding) and Mr Freeman.

MPDCL has opposed the appointment of Mr Freeman as the director on the grounds that the minority shareholders, such as GE and Bechtel have no powers to appoint Mr Freeman on the board. MPDCL has reiterated its claim for the appointment of second director as it holds 30 per cent stake in the beleaguered DPC.

MPDCL has demanded that appointment of four directors representing Enron Mauritius, which holds 65 per cent equity on behalf of now bankrupt Enron Corp in DPC, on the DPC board be stayed. These appointments were made in June-September 2002 by DPC’s board though they were stayed by the Bombay High Court on a MPDCL’s petition.