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HC adjourns DPC case to June 26

Enron-promoted Dabhol Power Company on Thursday informed the Bombay high court that prospects of an out-of-court settlement over its dispute with the Maharashtra State Electricity Board appeared 'bleak', and it would prefer a clear judgement regarding the dispute over jurisdiction of Maharashtra Electricity Regulatory Commission and validity of arbitration clause in the power purchase agreement.

The court adjourned to June 26 hearing on the petition filed by DPC which challenged a MERC order restraining the multinational from activating escrow account and initiating arbitration proceedings against MSEB.

The hearing was adjourned by Justices Ajit Shah and Sharad Bobde as Advocate General Goolam Vahanvati sought time to file reply to an amendment moved by the petitioner stating inter alia that it was MSEB's own stand that MERC had no jurisdiction to deal with any aspect of PPA.

Atul Setalvad, DPC's counsel, observed that talks between the two parties were 'cordial' but there appeared no prospect for a settlement to the dispute mainly because the Centre was not actively participating in the discussions and also due to the stand taken by MSEB and the state government.

"We do not think that in near future this dispute will be solved and even if it was solved what is the guarantee that such a dispute would not arise again", he said.

DPC's counsel said that its client wanted a determination of the issue of jurisdiction of MERC and also of the operation of arbitration clause.

The advocate general then replied, "if this is the stand of DPC then there is nothing to say from our side. We shall go on with the legal battle"

DPC has sought a direction from the high court to call for records from MERC and after perusing it, set aside the impugned May 29 order in favour of MSEB.

DPC has argued that Electricity Regulatory Commission Act 1998 came into effect much after PPA was signed between it and MSEB on December 8, 1993. The PPA has clearly provided for international arbitration in case of dispute between them.

Therefore, DPC argued, MERC had no jurisdiction to act, entertain or adjudicate upon any disputes and differences, which have arisen between it and MSEB in connection with PPA.

DPC said MSEB had entered into PPA after seeking the state government's approval. Both parties were fully aware that the PPA contained a dispute resolution mechanism, which provided for an arbitration of disputes and differences, in accordance with arbitration agreement set out in clause 20.3.

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