BackTCG set to approach high court over Indian Oil bid for Haldia Petrochemicals
TCG is of the view that the West Bengal government didn't share details of IOC's bid for the 40% stake
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Kolkata: The Chatterjee Group (TCG) is set to approach the Calcutta high court again this week, this time challenging last month’s selection of Indian Oil Corp. Ltd (IOC) as the highest bidder for the West Bengal government’s 40% stake in Haldia Petrochemicals Ltd (HPL).
TCG, a co-promoter of HPL, is the single largest shareholder with a 41% stake, and it has the right of first refusal on West Bengal Industrial Development Corp. Ltd’s (WBIDC) 675 million shares in the firm, which the state proposes to sell to the state-run oil marketing firm unless TCG matches its bid of ₹ 25.10 a share.
TCG, which will have to pay around ₹ 1,700 crore to claim WBIDC’s stake in HPL, is of the view that the state government didn’t share details of IOC’s bid, such as conditions attached to its ₹ 25.10-a-share bid. It only mentioned the price that TCG would have to pay if it wants to buy WBIDC’s shares, according to a person familiar with the situation.
The state government didn’t even name IOC as the selected bidder in its communication sent to Chatterjee Petrochem (Mauritius) Co.—a TCG arm—soon after a panel of state ministers decided on 10 October to accept the oil marketing company’s bid and conclude the auction, this person said, asking not to be named. IOC was the lone bidder.
The state government should have attached a copy of IOC’s bid with its note sent to TCG, this person said, adding: “It is unfair to expect TCG to decide on whether or not to match IOC’s offer unless it knows the conditions attached to it."
Though several companies including Reliance Industries Ltd, GAIL (India) Ltd and Cairn India Ltd had initially shown an interest in bidding for the West Bengal government’s stake in the embattled Haldia-based producer of polyethylene, only IOC turned up on 7 October to make a price bid for the 675 million shares that were to be sold through an open auction.
TCG has until the middle of November to decide whether it wants to match IOC’s bid. It was given a month to make up its mind.
A spokesperson for TCG declined to comment.
“We see no reason to share the details of IOC’s offer with TCG," said Partha Chatterjee, West Bengal’s commerce and industries minister, adding the state followed what its advisers asked it to do. Consulting firm Deloitte Touche Tohmatsu India Pvt. Ltd and law firm Amarchand and Mangaldas and Suresh A. Shroff advised WBIDC on the sale of its stake in HPL.
“TCG is raising these issues because it does not have the money to match IOC’s bid," added Chatterjee, who is also HPL’s chairman.
The state government followed the “letter of the law" while honouring TCG’s right of first refusal on WBIDC’s stake, said one of the state’s key advisers. “If it wants to know the conditions attached to IOC’s offer, it can always seek clarification from WBIDC," this person said, speaking on condition that he would not be named.
TCG had moved the Calcutta high court disputing the auction when WBIDC had formally announced its plan to sell its stake in HPL through an open auction. Though it didn’t manage to obtain an injunction on the auction, the court said that without its permission, WBIDC couldn’t take any action that could alter the ownership structure of HPL.
Lawyers familiar with TCG’s plans say the group views the notice sent to it as a violation of the restrictive order issued by the Calcutta high court. “WBIDC is clearly acting on the auction, whereas it was required to take the court’s clearance first," said a lawyer, who, too, did not wish to be named. “So why does TCG even think of whether or not to match IOC’s bid?" he asked.
“In my view this is no violation of the Calcutta high court order," said Chatterjee. “I don’t think the court barred us in any manner from informing TCG about the highest bid."
This pending legal dispute at the Calcutta high court has to be resolved for the deal to be decided one way or the other, said the adviser to WBIDC cited above. “The fair price of WBIDC’s stake in HPL has been discovered in a transparent manner, and I am sure it will get recognition from the court as well," he said.
For years, TCG has been fighting court cases claiming irrevocable right to acquire 155 million shares from WBIDC, which would give it control of HPL. The state had in the mid-2000s agreed to hand TCG management control of HPL, but a deal to transfer 155 million shares to it was aborted due to differences between the two co-promoters.
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