The Madras High Court has dismissed a petition filed by a Chinese company for winding up Sterlite Energy Limited, Tuticorin.
The Chinese company, SEPCO III Electric Power Construction Corporation, has a project site office at Baghiamal, Jharsuguda district, Odisha. It prayed for the winding up of Sterlite Energy and for the appointment of an official liquidator.
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Originally, Sterlite entered into four separate contracts with the Chinese company towards setting up a coal-based power plant of 3,600 MW, comprising four units.
In its petition, SEPCO said it had completed all its obligations under the contracts and all the four units were set up. The units were already operating commercially and generating revenue, with Sterlite selling power from all the units to various government and non-governmental agencies. Sterlite delayed payment of even the admitted milestone payments, especially after 2010.
SEPCO further said, “After several proceedings, Sterlite had agreed, on July10, 2012, to pay Rs.475 crore but paid only Rs.100 crore and failed to make any further payment. Going by the financial position of Sterlite, it is highly leveraged, as seen from its statements of financial affairs.”
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Value of contracts
However, Sterlite said in its counter that as against the total value of all the contracts working out to Rs.6,563 crore, it had already paid Rs.5,867 crore to SEPCO. Units 3 and 4 are yet to be completed to the satisfaction of the company. It also listed other issues as well.
Dismissing the petition, Justice V. Ramasubramanian pointed out that Sterlite had raised disputes even seven or eight months before the issue of the statutory notice by SEPCO and those issues were also kept alive.
“It is clear that the issues raised by Sterlite cannot be rejected outright as non-existent or imaginary disputes,” the Judge added.
Mr. Justice Ramasubramanian said, “Ninety per cent of the total value of all the contracts had already been paid by [the] respondent (Sterlite).
“In the light of such a staggering figure, it is impossible either to think that [the] respondent had become bankrupt or that they are unable to pay their debts… I find no grounds to order the winding up of the company.”