UK-based The Children’s Investment Fund Management LLP (TCI), the single-largest shareholder of Coal India after the Indian government, is angry. Not content with filing a writ petition against the state-owned coal miner and the government, it is now threatening to make every individual director party to its legal fight to protect its interest.
In a letter written to Coal India chairman Narsing Rao on Thursday, TCI partner Oscar Veldhuijzen has pointed out that the directors are responsible for failing to raise prices of linkage coal despite taking a decision to do so.
“The directors’ continued failure to deliver on this is further evidence of their unwillingness and/or inability to run CIL in the best interest of its shareholders. If prompt, transparent and verifiable steps are not taken to properly rectify these breaches of duty and the damages caused by them, we reserve the right to commence legal action against the directors of CIL as well,” Veldhuijzen has written.
TCI has also demanded that CIL present and implement a programme to increase coal washing without delay.
The British limited liability partnership firm had moved the Delhi High Court earlier on Monday after threatening to do so for several months. More legal steps are on the anvil if its demands are not met immediately, Veldhuijzen has written.
“You will be aware that on July 30, we filed a writ petition with the High Court in Delhi against the Union of India and Coal India under Article 226 of Constitution of India. The Delhi High Court was pleased to issue notice to both CIL and Union of India. I wanted to take this opportunity to make clear to you that this step in no way represents the totality of our efforts to vindicate our legal rights as a shareholder of CIL and to ensure those who have either destroyed, or frustrated the full realisation of, value in CIL are properly and fully held to account for their actions,” the TCI partner noted.
TCI’s writ petition attempts to quash the Presidential directive issued in April and also the directive purportedly issued on January 25 by the then coal secretary Alok Perti to CIL via a letter directing the company to revise the price hike made in December.
TCI has argued that coal prices are deregulated and hence the government does not have legal authority to interfere with the discretion with CIL. The petition has also argued that the January revision is illegal, being a “direct consequence of the illegal and invalid instructions of the ministry,” according to a media statement issued by TCI.
The presidential directive was issued in April under Article 37 of the articles of association of CIL by the joint secretary, which then forced the CIL board to firm up a model fuel supply agreement for its linkage customers.
“TCI believes that there has been no application of mind by the ministry to assess if any public interest, let alone a substantial public interest, would be served by issuing such a directive,” the statement said.
These apart, TCI is now objecting to the very concept of assuring supplies at notified prices to key customers like power, steel, cement and fertiliser through FSAs.
“The whole system of FSAs should be scrapped and, following the law laid down by the Supreme Court in many cases, including the recent 2G judgment, a natural resource like coal should be auctioned rather than given through FSAs. TCI also believes that the FSA system of distributing coal has an inbuilt risk of engendering corruption.”