TCI Cyprus on Tuesday issued a notice offering open invitation to join the suit against the Union government and Coal India (CIL), which it filed on October 12 in the Calcutta High Court claiming compensation for underpricing coal. The suit also charged the government of excessive intervention in the function of CIL and allowing losses of the natural resource through excessive theft.

TCI counsel Imran Karim told FE that the open invitation has been made through newspaper advertisement ?on the basis of a specific High Court( order 1, rule 8).?

A CIL official said since TCI has filed a representative suit, it has taken the court’s clearance to throw an open invitation for joining the suit against the Union government and CIL.

TCI, on behalf of all shareholders, which also includes CIL (the majority shareholder), has claimed a compensation of R2,15,250 crore.

The suit points out to loss of additional market capitalisation. The hedge fund has also claimed 18% interest on the compensation from 2011 till the administration of the decree.

The suit involves 26 defendants, though the claim is on behalf of defendant number 1- Coal India (CIL), which is said to have incurred the R2.15-lakh-crore loss since the IPO. But the suit does not make clear as to from whom the compensation is being sought.

The suit says: ?The aforesaid loss (R2,15,250 crore) has been suffered by the defendant No 1 (CIL) by reason of breach of duty by the Nos 2 to 19 (government, subsidiaries and board members) and the plaintiff (TCI) is entitled to claim such decree on behalf of defendant No 1 at the rate of 18% interest per annum.?

Earlier, in August, Childrens’ Fund Management in the UK and TCI Cyprus, which jointly hold 1.01% shares at present (6.36 crore shares valued at Rs 2,284 crore at the current market price) filed a suit at the Delhi High Court charging underpricing of coal and government?s excessive intervention, though no compensation was claimed.

The suit filed at the Calcutta High Court has claimed the compensation but, according to legal experts, two cases on the same issue cannot go in two High Courts of the country. Therefore, one case has to be dropped. CIL will file a counter affidavit on November 30 and has sought dropping the Delhi HC case, sources close to the development said.

Ministry sources said that before the hedge fund filed a suit at the High Courts, it pitched for two bilateral investment treaties (BIT) with the government?one with the UK and the other with Cyprus? seeking protection of their investment. ?The two investors, which have jointly picked up CIL’s stake, issued a BIT notice to the government with a time-frame of six months to come out with a decision. But before the lapse of six months, the foreign company has filed law suits,? a ministry source said.

TCI Cyprus has estimated total coal sales of 861 million tonne between November 2010 and March 2013 and has assessed a loss of Rs 2,500 per tonne ?by reason of price differential? to derive a figure of more than Rs 2.15 lakh crore. TCI has shown market capitalisation losses of CIL on three counts. First, a loss of Rs 62,843 crore due to the government not allowing price hike on December 2011. Second, an additional market capitalisation loss of Rs 8,72, 813 crore for not bringing coal prices on a par with international prices. And third, a market capitalisation loss of Rs 70,875 crore on account of an expected increase in coal sales volume by 7-8% but selling it at a low price. TCI?s loss is 1.01% of the total estimated loss of market capitalisation, the suit says.

TCI has argued that the government has not allowed CIL to bring coal prices on a par with international rates, as promised in the red herring prospectus of the IPO.

But CIL officials said the prospectus had a clear mention that since the government was the majority shareholder it would have considerable intervention.

The Calcutta High Court will hear the case on December 12.