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Corporate - Corporate Disputes


MSEB issues contempt notice against DPC

Our Bureau

Mumbai , July 2

THE Maharashtra State Electricity Board has issued a contempt of court notice to the Dabhol Power Company in the Mumbai High Court against the Rs 26,000-crore arbitration filed by DPC in a London Court.

According to MSEB, DPC has violated the Supreme Court's injunction against starting any arbitration proceedings.

The appeal will be heard on July 5.

The Supreme Court had ordered DPC to not move on any international arbitration until it was resolved whether MERC or international arbitration courts have the authority to solve disputes between MSEB and DPC.

DPC, on the other hand, had charged MSEB with violating its "partnership agreement".

A source close to DPC's promoters GE and Bechtel, said the company had to move international court before May 21, 2004. "As per India's Statute of Limitation, the wronged person must move against the alleged wrong doer within three years, or the former loses his rights. On the other hand, there was a Court injunction against moving international arbitration proceedings. It was a catch 22 situation," he said.

DPC is expected to argue that the international court has been moved against violation of a partnership agreement and not against any dispute related to the power purchase agreement (rescinded by MSEB in May 2001). So far, most legal tangles between Indian parties (MSEB, State and Central Governments and lenders) and DPC revolve around disputes relating to the PPA.

DPC may argue that since MSEB had signed the partnership agreement in New York, this matter does not relate to other cases being fought in the Indian Courts.

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