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Coal India to face India's first class action suit in 15 days

Wednesday, 28 November 2012 - 6:00am IST | Place: Kolkata | Agency: dna

You have 15 days to join the country's first class action suit filed by TCI Cyprus Holding in the Calcutta High Court against Coal India. You claim your own monetary damages.

As a shareholder of Coal India Limited, are you angry that the company is not selling coal at market prices, losing out on revenue and earnings per share and thus harming your interests?

Are you peeved that the government is forcing Coal India to roll back the proposed price hike?

Are your feelings similar to those of the activist hedge fund Children's Investment Fund Management of the UK, a shareholder in Coal India that has been taking the company to task for what it perceives as the latter's unprofessional, irrational and anti-shareholder practices?

Well, if your answer is 'yes' to all the three questions, you have 15 days to join the country's first class action suit filed by TCI Cyprus Holding in the Calcutta High Court against Coal India. You claim your own monetary damages.

There is no precedence to this kind of suits in the country, which in this case has been technically termed as a “representative action”.

"This is a class action suit and any shareholder interested in it can apply to the court within the next 15 days with their own claims," a lawyer with Luthra & Luthra, the legal firm representing TCI, told DNA.

Besides Coal India as an entity, all its 17 directors, its largest shareholder (the Indian government) and its seven mining subsidiaries have been made party to the suit.

TCI, which owns 1.007% of Coal India as at September-end, is the second largest investor in the mining major.

If you don't have an idea how much to claim from Coal India, here's a clue: TCI has held Coal India and the others responsible for an estimated Rs 2,15,250 crore of losses suffered by the company by not selling coal at market rates to linkage customers since it went public.

“Additionally, in our plaint, we have sought a decree for a sum of Rs 9,942.18 crore for the loss in the value of holdings of TCI and perpetual injunction restraining the government from interfering with the administration of the company,” the lawyer said.

TCI has also prayed for attachment of Coal India’s properties if the judgment goes in its favour.

The Companies Bill 2011 approved by the Union Cabinet last month provides for class-action lawsuits under Section 245 and 246, allowing a large number of people with common grievances to sue or be sued as a group.

“The foundation of this representative action is these allegations. The government of India is making an undue interference in the fixing and regulation of price of coal. The fact is that the price of coal fixed by them is much below its market value, as a result of which the first defendant (Coal India) is suffering loss. This price fixing or regulation is made mostly in case of fuel supply agreements.

“Secondly, there is a large-scale theft or misappropriation of this resource, which is also a cause of loss to the company, it is alleged. The above allegations are denied by Sudipto Sarkar, learned senior advocate appearing for the first defendant,” Judge IP Mukerji had said while ordering the institution of the class action suit in October.

While no interim order was given, the court directed filing of affidavit-in-opposition by November 30.

The next hearing of the case is on December 12.

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