Kolkata: The spat between the West Bengal government and The Chatterjee Group (TCG)—the sparring co-promoters of Haldia Petrochemicals Ltd (HPL)—intensified on Tuesday with the state’s commerce and industries minister Partha Chatterjee securing his appointment as the company’s chairman by majority support of directors and TCG telling HPL’s board that it had moved the court of arbitration of Paris-based International Chamber of Commerce (ICC) for settlement of all outstanding disputes.
The minister ousted TCG chief Purnendu Chatterjee as chairman. Partha Chatterjee’s appointment, opposed in Tuesday’s board meeting by the three TCG representatives, was supported by nine other directors. It is seen as a move aimed at re-establishing the state government’s control over HPL—a reversal of the state’s decision eight months ago to give TCG a larger say in the management of the company. In Tuesday’s board meeting, HPL also agreed to convert Rs 128 crore of debt into equity and sell new shares to lenders, said an HPL director, who declined to be identified. “This is the first step being taken by the company to comply with the conditions laid down by the lenders for restructuring of its debt,” he said.
HPL’s articles of association, or the constitution of the firm, say its chairman can only be appointed by consensus and not by majority. “Purnendu Chatterjee’s appointment as chairman in July last year was by consensus,” a lawyer familiar with the matter said, requesting anonymity. “By appointing the minister as HPL’s chairman, the state government might have created grounds for further dispute.”
“But what happens if there is no consensus—could the company operate without a chairman?” asked the HPL director cited above. “Well, in such a situation, the chairman has to be determined by majority.”
Partha Chatterjee confirmed his appointment as HPL’s chairman, but declined to make any further comments. Purnendu Chatterjee declined to comment.
“Though it isn’t immediately clear whether the minister has assumed an office of profit—perhaps he hasn’t by renouncing all financial benefits of the post—it is unusual for a minister to become the chairman of a profit-making entity,” said Niloy Pyne, a corporate lawyer. He was referring to a law that bars members of Parliament and state legislatures from accepting appointments that are influenced or controlled by the central or state governments.
Meanwhile, TCG told HPL’s board on Tuesday that it had approached ICC for arbitration, according to two HPL directors, who declined to be named. The key dispute between the two promoters stems from TCG’s claim to 155 million shares currently owned by West Bengal Industrial Development Corp. Ltd (WBIDC). The transfer of these shares would give TCG majority control in HPL. TCG owns 44.23% of HPL’s shares, while WBIDC owns 43.27%. Indian Oil Corp. Ltd and the Tata group own 9.62% and 2.88%, respectively.