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SPIC promoters file plea against Madras HC order

Southern Petrochemicals Industries Corporation Chairman M A Chidambaram and Vice-Chairman A C Muthaiah today filed an appeal in the Madras high court against the single judge order, which had directed them, along with former chief minister J Jayalalitha, to compensate the Rs 282.9 million loss, suffered by the government in the disinvestment of the Tamil Nadu Industrial Development Corporation's stake to SPIC.

On December 15, Justice Y Venkatachalam, while allowing the petition filed by Janata Party President Subramanian Swamy, had directed the three to compensate the loss.

A division bench, comprising Chief Justice M S Liberhan and Justice D Raju had, on December 19, stayed a portion of the single judge's order directing Jayalalitha to pay the compensation, on an appeal filed by her. However, the bench had declined to stay the CBI probe ordered by the judge into the deal, but directed the CBI not to arrest Jayalalitha.

In their appeal, the industrialists submitted that none of the shareholders had raised any objection to the renouncement, which had become final and shares had been allotted to renounces on conversion of bonds.

The appellants submitted that Dr Swamy, in order to gain publicity, had filed the petition, purporting to be a public interest litigation. The renouncement involved no conspiracy or understanding between them (appellants) and Jayalalitha, as alleged by Swamy, they said.

If the single judge's order was implemented, they would be put to great hardship and incur an irreparable loss, they submitted.

The state government and TIDCO had in their counter, stated that it was impossible for TIDCO to hold 26 per cent of the capital of SPIC as several share issues had taken place after the conversion of the bonds into shares, increasing the company's paid up capital to Rs 880.5 million, they said.

Even assuming that the renunciation was null and void, TIDCO could not hold 26 per cent in SPIC's capital unless it acquired shares in the open market to the extent of 10 per cent, they said.

The appellants submitted that the articles of association of SPIC, the government order, and the statements made in the prospectus, would establish that either Chidambaram or a nominee of the private promoter was entitled to be appointed as the company's chairman. However, the single judge had directed that the chief secretary be appointed as chairman and TIDCO has 26 per cent in the company's capital.

They alleged that Swamy had filed the PIL to settle political scores with Jayalalitha, abusing the process of the court.

The formula adopted by TIDCO arriving at a sum of Rs 123.7 million towards the value of the right renounced in respect of 176,000 bonds was fair and reasonable. If bulk rights were unloaded in the market, the price would crash down, affecting the renouncer, the company and the issue itself, they contended, while praying for quashing the single judge's order and staying further proceedings pursuant to the order.

EARLIER REPORTS:
Madras HC indicts SPIC top brass, Jayalalitha
Madras HC bench stays order against Jayalalitha

UNI