New Delhi: British hedge fund The Children's Investment Fund Management has served a notice to the Indian government for alleged violations of international treaties related to its investments in Coal India.
The latest salvo comes close on the heels of the UK hedge fund threatening to initiate legal action against the board members of state-run Coal India Ltd (CIL) for failing to protect the interest of minority shareholders.
"The Republic of India's recent conduct with respect to CIL has seriously impaired the business activities and operations of CIL and has contravened each of the treaties," The Children's Investment Fund (TCI) said in a letter to the Finance Ministry on March 27.
According to the letter, the Indian government's actions have breached the country's treaties with Cyprus as well as the UK and Northern Ireland, where the TCI's funds are domiciled.
TCI's investments in Coal India are through TCI Cyprus Holding Ltd and Talos Capital Ltd, which is registered in Ireland.
The hedge fund has said the letter was a "written notification of a dispute arising" out of breach of the two treaties.
Among the alleged violations cited in the letter are the government's direction that CIL price and sell coal under Fuel Supply Agreements (FSAs) at a substantial discount to international market rates.
TCI has also pointed out that government is "generally controlling and issuing directions to the company (CIL) in a manner which is abusive to minority shareholders".
It has requested for formal negotiations with Indian government on the issue for amicable settlement of the claims under the respective treaties.
"Failing such settlements within six months, we reserve our rights to initiate arbitration" in accordance with Cyprus and UK treaties, according to the letter.
PTI
First Published: Wednesday, March 28, 2012, 22:41