A receiver appointed by the Mumbai high court has done a valuation of the company's inventories and book debts which will be liquidated, if necessary, to square the outstandings with StanChart.

StanChart filed a case nearly two months ago seeking repayment of its dues. The court had initially directed PAL-Peugeot to begin its repayment schedule early this month. This would have amounted to roughly 40 per cent of sales of the Peugeot 309 (diesel and petrol), 118 NE and 1.38D. The problem here is that StanChart's dues are to be settled by Automobiles Peugeot of France and not by the Indian joint venture, PAL-Peugeot.

Sources say that the French automaker had made an offer to Premier Automobiles (PAL) stating that it would settle the joint venture's dues with foreign banks, a list comprisingStanchart, Societe Generale and others. This communication was believed to have been made more than three months ago and when there was no indication of the money coming, Stanchart took up the case with the Mumbai high court.

PAL-Peugeot, in the meantime, sought more time to discuss the issue with Automobiles Peugeot. The next hearing has, therefore, been postponed to the first week of October. "The ball is in Peugeot's court and the next 15 days will decide the fate of the joint venture," sources said.

Even if the French company makes an assurance to pay the StanChart outstandings, it would make little difference to the Indian operations which have been paralysed for over three weeks now. There is no way production can resume without infusion of funds and the fate of the 2000-and-odd employees hangs in balance. Even now, work has not started at the plant and sources say this is due to the pending StanChart case which is the major stumbling block.

"Every move to access funds will require the permissionof the court and this by itself is a tangle. The fact that a chunk of the sales proceeds should be surrendered means that for all practical purposes, PAL-Peugeot is finished," sources said.

Sources say that apart from assuring repayment of dues on its own to foreign banks, Peugeot had also communicated to PAL that it would withdraw all dues to the parent company from PAL-Peugeot, comprising licence fees and money for supply of completely knocked down (CKD) kits. It had also offered its 32 per cent share in the company, valued at Rs 84 crore when the joint venture was incorporated in 1994, to PAL for US $1.

There have also been unconfirmed reports that the Indian automaker, while welcoming these initiatives, sought more time for restructuring the ailing PAL-Peugeot. Mahindra & Mahindra was at one point tipped to take over the plant but changed its mind. Since then, the management has gone all out to keep production going and the credit for this has been attributed to managing director, JM Vakil.

Peugeottook its inexplicable decision to call it quits in November last year just when it seemed that the joint venture was all set to start a promising new innings. The partners, whose feud resulted in a legal battle, agreed to bury the hatchet and at the last minute, the French company changed its mind and decided to get out, instead.

Since then, every effort was made to keep workers busy at the plant and money was raised from every quarter, which included selling used Peugeot 309 cars of the expatriates. The 118 NE and 1.38D were still being produced and on two occasions, about 50 CKD kits of the 309 were ex-bonded and assembled at the plant. There are still over 200 kits lying at the warehouse.