Tata Power’s stocks are set to gain attention following the Delhi High Court’s request for answers from the Central government and other parties. This is about a case where Tata Power is disputing the coal ministry’s decision to cut its compensation for losing the Mandakini Coal Block in Odisha.
The High Court has ordered that no changes be made to the compensation ruling until December 4, when they will have another hearing. The authority in charge had lowered the compensation for Tata Power and others regarding the Mandakini Coal Block after a company called Karnataka Power Corporation (KPCL) received the coal block. Tata Power is claiming that this new decision is unfair and was made without proper consideration.
Tata Power argued that the authority, which is allowed to make these decisions under the Coal Mines (Special Provisions) Act, 2015, slashed the compensation from Rs 182.52 crore to Rs 114.91 crore, saying there was confusion over who the prior buyers were. Tata Power, along with two other companies, was listed as previous claimants for the coal block.
The company insisted that the authority incorrectly included IFCI Ltd as a secured creditor and awarded them Rs 102.47 crore without recognizing that IFCI hadn’t challenged the original compensation ruling, which had already been finalized.
Back in 2008, Tata Power and the other companies created Mandakini Coal Company Ltd (MCCL) to manage the coal block. They each owned an equal part of the company. The coal block was not mined, but MCCL borrowed Rs 140 crore from IFCI in 2014, which the companies guaranteed together.
After the Supreme Court cancelled the coal block allocations in 2014, IFCI demanded repayment of the loan by May 2015. IFCI later filed a claim of Rs 142.92 crore to receive compensation. They wanted the money because they were considered a secured creditor of MCCL.
While Tata Power and another company cleared their debts, IFCI reduced its claim to Rs 54.36 crore, related to the remaining company that went bankrupt. However, Tata Power’s compensation continues to be unpaid by the authority.
Meanwhile, MCCL has an appeal pending for more compensation, but neither KPCL nor IFCI has disputed the original compensation order.
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