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SC's restraint order on DPC to encash Rs 1.36 billion letter of credit remains

The Supreme Court on Thursday directed that its earlier interim order restraining US multinational Enron promoted Dabhol Power Company from encashing the Rs 1.36 billion letter of credit given by Maharashtra State Electricity Board would continue till further orders.

While postponing hearing on the DPC petition challenging a Bombay high court order to January 10 next year, a Bench comprising Chief Justice S P Bharucha, Justice Y K Sabharwal and Justice Arijit Passayat ordered that the court's interim order dated September 21 would continue to operate.

On September 11, DPC had invoked the LC from Canara Bank accusing the MSEB for non payment of dues but it was restrained to encash the same as partner MSEB stopped the payment by obtaining an injunction from the Bombay high court.

DPC had justified its decision to invoke the LC saying care and preservation of the entire project during the ensuing months would be jeopardised as DPC was unable to access and utilise funds available under the LC.

On August 6, the Supreme Court had stayed the arbitration proceedings initiated by the multinational and asked the Bombay high court to decide afresh whether Maharashtra Electricity Regulatory Commission had the jurisdiction to adjudicate the dispute.

DPC had challenged the June 26 order of the High Court holding that the Commission, being an expert body, had jurisdiction to hear the dispute.

The court had said that "until such time the high court finally hears and decides the writ petition filed by DPC challenging the jurisdiction of MERC, the Commission will not pass further orders on the application that has been made before it by the Maharashtra State ELectricity Board.

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