Search the Internet          Tips  Sites: Finance, Investment

DPC can't invoke letter of credit against MSEB

BS Law Correspondent

The Supreme Court has declined to modify its earlier status quo order restraining Dabhol Power Corporation from invoking the letter of credit for Rs 1.36 billion which it says was due from the Maharashtra State Electricity Board towards its April bill. The Enron-promoted DPC's application will be heard again on January 10.

Counsel for DPC P Chidambaram submitted before the bench headed by new Chief Justice SP Bharucha that no money was coming to it because of the court orders.

There are several complicated securities involved in the agreement for the power generation and supply. If the payment for the April bill is stayed, it will give the SEB a "window" to hold back further payments, the counsel said and pleaded that the status quo order should be confined to the April bill only. But the court did not do so.

MSEB counsel TR Andhyarujina contended that the earlier Supreme Court order had asked the Bombay High Court to decide the jurisdiction of the state electricity commission where the dispute originally started.

The high court had ruled that prima facie the commission had the jurisdiction. On appeal, the Supreme Court asked the high court to decide the question of jurisdiction first. The arbitration proceedings shall also not go forward. The case is scheduled for hearing in December in the high court. Meanwhile, status quo should prevail as directed by the apex court, the counsel said.

The court has made Bank of America a party to the case at its request. DPC had asked Bank of America to get the fund from Canara Bank. However, it was restrained by the Bombay High Court on a petition by the electricity board.

According to the earlier Supreme Court order, "until such time the high court finally hears and decides the writ petition filed by DPC challenging the jurisdiction of the commission, the commission will not pass further orders on the application that has been made before it by MSEB".

Powered by

YOU MAY ALSO WANT TO READ:
The Enron Saga

The Rediff-Business Standard Special
The Budget 2001-2002 Special
Money
Business News

Tell us what you think of this report