The coal ministry may soften its stance towards London-based The Children?s Investment Fund (TCI), the second largest stakeholder in Coal India, to prevent the latter resorting to arbitration under the relevant bilateral treaty to resolve the dispute over the alleged mismanagement of the PSU.
The ministry has agreed to hold talks with the UK investor on May 29 to discuss issues that could come under the Indo-Cyprus bilateral investment treaty, even as it sticks to the stand that pricing of coal and other commercial matters would be left to the listed company.
?They (TCI) officials are coming here to talk about their issues. We are not going to discuss any commercial matter such as pricing. The discussions would be around (Indo-Cyprus) international treaty and we would try to avoid an arbitration case,? a senior coal ministry official said.
The ministry?s move comes at a time when the UK-based institutional investor which holds a little over 1% in the mining firm is close to filing a petition in an Indian court of law. According to persons in the know, a formal suit will be filed in an Indian court next week, which will run concurrently with the complaint already filed under the trade treaty. TCI?s stake in CIL is held through its fund registered in Cyprus.
The Indian government earlier this year had lost a case against Australian mining company White Industries in an arbitration tribunal constituted under the Australia-India bilateral investment treaty. White Industries was a joint venture partner of Coal India for the development of a major coal mine.
The CIL share prices fell 1.47% at Rs 305.90 on the Bombay Stock Exchange on Tuesday.
?Unfortunately, we are facing some delays in the preparation for our court case in India but hope to file (the suit) next week,? TCI partner Oscar Veldhuijzen said in an email response to FE, without divulging further details. TCI, the second-largest shareholder in CIL after the government, has already hired Delhi-based Luthra & Luthra Law Offices to fight its legal battle.
Meanwhile, in response to an earlier query, Veldhuijzen had said the firm has enough evidence to pursue a case in the Indian courts and is also in the process of gathering more information to strengthen its case.
?We have strong evidence for a legal case and we also have a few pending RTI (Right To Information) applications,? Veldhuijzen had said. ?We keep on doing that to build a strong case. The government cannot simply afford to ignore the issues raised by us. They need to cooperate if they want to raise billions of dollars through divestment,? he added.
In April, TCI had said that it has received advice that the ?conduct of CIL and its management over the past months constitutes serious breaches of key provisions of Indian corporate law, namely, breach of fiduciary duties and CIL?s affairs being run in a manner that is both prejudicial to the public interest and oppressive to shareholders.?
In the numerous letters written to the board of CIL along with officials of finance and coal ministries, TCI has alleged that it was wrong on part of the government to direct CIL to sell coal under fuel supply agreements (FSA) at a discount of up to 70% compared to the international prices.
Further, TCI has raised a red flag over the government decision of directing CIL ? which went public in 2010 ? to enter into additional FSAs with power companies wherein CIL will have to unconditionally guarantee supplies or face severe financial penalties.
TCI has already sent a formal notice to the government on May 16 under the terms of the trade promotion treaty signed between India and Cyprus. It has said that if a settlement is not reached within six months, arbitration proceedings in accordance with Article 9 of the Treaty would be initiated.
