HYDERABAD: Privately-held Kakinada Sea Ports Ltd (KSPL) and Bhagyanagar Gas Ltd (BGL) - a joint venture of GAIL and HPCL - are locked in a legal battle with the former moving the High Court regarding allotment of equity shares to the latter.
The move comes after the Company Law Board (CLB) dismissed KSPL’s petition last month challenging the allotment of equity shares during BGL’s AGM held on August 20, 2014.
When contacted both KSPL and BGL refused to comment. The case is expected to come up for hearing this month.
BGL was incorporated as a private company in 2003 with GAIL, HPCL and KSPL as a joint venture for distribution and marketing of CNG, LPG, auto LPG and natural gas in united Andhra Pradesh.
KSPL invested `2.5 lakh equity amounting to 50 per cent shareholding, while GAIL and HPCL held 25 per cent each.
As per the Memorandum and Articles of Association (AOA), KSPL agreed to reduce its holding to 10 per cent or less by transferring its balance equity to others as may be agreed to by GAIL and HPCL or by not participating in additional equity.
In 2009, when BGL wanted to restructure equity roping in potential investors, KSPL objected that it be considered as a promoter and shares be alloted at par with HPCL and GAIL and not at a premium in line with incoming investors.
In September 2014 KSPL filed a petition with CLB challenging BGL’s move allotting 2,24,87,500 equity shares each to GAIL and HPCL.
In his order dated September 14, 2014, BSV Prakash Kumar, Judicial member, CLB, Chennai bench observed that KSPL was never defined as a promoter in the Memorandum and AOA.
“...On seeing all the correspondence, it is clear that KSPL has never been given to understand that it would get shareholding at par as is given or offered to GAIL or HPCL,” the CLB order said.
It added that on the factual aspect, KSPL will not have any right for allotment of either 50 per cent or 10 per cent along with GAIL and HPCL.
“...It appears that this KSPL quietly come into the company by agreeing for everything that was put to him by GAIL and HPCL and now turn round expecting windfall by taking the shelter of the procedural aspects here and there from the provisions of law,” it noted.