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Dabhol legal tangle widens

BS Law Correspondent in New Delhi | December 03, 2003 09:37 IST

The Supreme Court on Tuesday impleaded the subsidiaries of GE and Bechtel -- key shareholders in the Dabhol Power Corporation -- as parties to the appeal moved before the Supreme Court for restarting the litigation-embroiled plant.

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It also asked them to respond to suggestions about fixing interim power tariff for the sale of electricity by DPC to the Maharashtra State Electricity Board.

The companies impleaded as parties are GE subsidiary Capital India Power Mauritius and Bechtel subsidiary Energy Enterprise.

The two companies did not appear before the court and challenged the jurisdiction of the Indian court in the matter. According to them, they will be represented by DPC.

However, this was opposed by the Attorney-General Soli Sorabjee, financial institutions and the MSEB.

They said the two companies had demanded $650 million each for restarting the plant. Moreover, they had alleged before an international arbitration forum that they were victims of malicious prosecution in Indian courts and had demanded compensation.

Therefore, they should be called to the court and asked to cooperate in efforts to restart the project.

DPC Counsel P Chidambaram said the two shareholders did not want to submit to the jurisdiction of the court and they would speak through him.

If they were impleaded and asked to file for power of attorney in the Supreme Court, there would be further complications and delays, Chidambaram warned.

If financial institutions and others could restart the plant without the help of the GE and Bechtel subsidiaries, they were welcome to do so, he added.

Chidambaram further referred to a letter written by DPC to the Centre, in which it had given its response to the government's queries on equity, claims, arbitration and priorities. However, the other parties were unaware of this letter, which was written on October 10, he added.

The bench, consisting of Justice YK Sabharwal and Justice DM Dharmadhikari, told financial institutions, the Centre, the MSEB and the state government to file their response to the restarting of the plant and adjourned the hearing till December 17. The bench observed that the two shareholders could not stay out of the proceedings.

After US power company Enron pulled out of the Dabhol project and went bankrupt, the venture got caught in a web of litigation.

The plant was closed some two years ago and the assets taken over by financial institutions. A receiver has been appointed.

The idea of restarting the plant was mooted when DPC moved the Supreme Court on November 17 objecting to the MSEB's decision to approach the Maharashtra Electricity Regulation Commission on the fixing of interim tariff.

DPC's stand was that the Supreme Court had passed a consent order that none of the parties would approach either MERC or the tribunal in their dispute over the power purchase agreement.

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