Nearly two decades ago, when a 40-plus Purnendu Chatterjee arrived at the barren industrial scene of West Bengal, he received a Hero’s welcome, for giving shape to the State’s dream project—Haldia Petrochemicals Ltd (HPL). He became a poster boy of West Bengal’s ‘industrial resurgence’.
On Tuesday, he won a protracted legal battle against the petrochemicals company he created and its co-promoter, the West Bengal Government, to exercise his right to approach the ICC International Court of Arbitration, in Paris, for settling an ownership dispute.
The New York-based venture capitalist, who owns nearly 41 per cent in HPL through Chatterjee Petrochem (Mauritius) Company, accuses the State government of violating a January 12, 2012, agreement, denying him the opportunity to gain a 51 per cent controlling stake.
He wanted to approach the ICC (International Chamber of Commerce), according to the arbitration clause in the agreement, to settle the dispute over a nine per cent stake in the company. . But HPL and the State government felt the 2002 agreement became invalid following subsequent agreements (between the State and Chatterjee) in 2003 and 2004.
In Tuesday’s order, the apex court observed that the 2002 treaty is a “principal agreement” that “continues to be in force”. The observation may give Chatterjee an extra edge to argue his case before the international panel.
HPL in sickbed But Chatterjee don’t find enough reasons to rejoice the “victory” that came after years, and at the expense of HPL, say people close to him.
The company that directly or indirectly remained under State control for the past seven years stopped making profit in 2008. As on September 2013, the accumulated losses wiped out its net worth. Bankers, led by State Bank of India, denied further support till ownership issues are resolved. “HPL is in a terrible shape. It was not supposed to be involved in a dispute between promoters, but it did. Now, the task of bringing it back on track may prove more difficult than building it in the 1990s,” said a person close to The Chatterjee Group (TCG), requesting anonymity.
Chatterjee, he said, is still open for reconciliation than dragging HPL into costly legal proceedings abroad and adding to its woes. “Hope everybody becomes sensible enough to start protecting the interests of Haldia Petrochemicals.” Sources say the proposal came up for discussion at a recent meeting between the top honchos of SBI and IndianOil Corp Ltd (IOC). IOC, which holds an 8.9 per cent stake in the ailing company, feels that unless the two main promoters urgently reach a consensus, HPL may slip into a coma.
Missing link But there is one missing link in this whole plot. The Mamata Banerjee-led Trinamool Congress Government of West Bengal is adamant that there won’t be any out of court settlement. “There is no chance for an out of court settlement. We will fight it out,” State Commerce and Industry Minister Partha Chatterjee, who is also the chairman of the company, told Business Line on Wednesday.
Evidently, he is irate that the Supreme Court order has thrown a spanner in the State’s plan to divest its 40 per cent holding, including the disputed 9 per cent, in HPL to IOC for Rs 1,700 crore.
The decision for share auction was taken ignoring objections from TCG’s Chatterjee and a note of caution from the HPL management as early as in October 2011.
But what if Purnendu Chatterjee wins the case at Paris? The minister claims the government wouldn’t allow TCG to gain control over the project.
“That person (Purnendu Chatterjee ) has never worked in the interest of HPL. We will exercise control with the support of Tata Group (2.67) and lenders (7.57 per cent),” Minister Chatterjee said.
But the big question is: Can HPL take any more trouble?