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HC stays Rs 72.88 crore demand notice to REL

Bombay HC has asked the government to give a hearing to the energy major in six weeks, reports Urvi Jappi.

india Updated: Nov 29, 2006 01:04 IST
Urvi Jappi

Staying the demand notice issued to Reliance Energy Limited (REL) by the Maharashtra Government for payment of over Rs 72.88 crore, the Bombay High Court has asked the government to give a hearing to the energy major in six weeks.

The demand notice had been issued by the tehsildar of Dahanu Taluka to REL in May 2005 asking it to pay Rs 55.42 crore for violation of the lease agreement. In November 1989, Maharashtra Government had leased 821.58 hectares of land in three villages in Dahanu—Asangaon, Agwan and Vadkun for setting up a power plant for generating electricity.

In 1992, Bombay Suburban Electric Supply's name was changed to simply BSES. With Reliance stepping into the picture in February 2004, BSES was changed to REL. The latter had informed the Additional Collector of the Jawahar District about the change in name.

The tehsildar wrote a letter to REL in May 2005 demanding Rs 55.42 crore for transferring the land without taking permission from the government. REL opposed the demand notice stating that it had merely changed the name and had not transferred the land as claimed by the government. Despite various correspondence in between, the tehsildar issued another demand notice on October 13 directing REL to pay Rs 72.88 crore. The amount was inclusive of three years' interest.

According to the state, REL had violated the agreement clause which stated that when land was transferred, the Maharashtra government would be entitled to unearned increment upto 90 per cent. After which REL approached the HC terming the demand notice as illegal and bad in law.

Additional Government Pleader Jyoti Pawar told the court that they were acting on directions issued by the Auditor General asking REL to pay 75 per cent of unearned increment amounting to Rs 55.42 crore.

A division bench of Justice Ranjana Desai and Justice VM Kanade asked the tehsildarto issue the showcause notice to REL and give them a hearing before taking any decision.

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First Published: Nov 28, 2006 23:54 IST