SSNNL bonds: HC adjourns case for final hearing on December 18

The final hearing on the premature payment of the deep discount bonds (DDB) issued by the Sardar Sarovar Narmada Nigam Limited (SSNNL) will be held by a division bench of the Gujarat High Court on December 18. The bench will comprise Justices R P Dholakia and M D Shah. The matter reached the court after the state government came out with the Sardar Sarovar Narmada Nigam Limited (Conferment of Power to Redeem Bonds) Act in March 2008. This Act empowered the SSNNL to redeem the DDB to investors before maturity. The bonds were issued in 1993 to finance the Sardar Sarovar project after the Gujarat government refused to go to the World Bank for loans owing to the latter’s harsh conditions. After the Act was passed in March 2008, the SSNNL issued a notice on November 3, 2008 to redeem DDBs on January 10, 2009. Through notifications, the bond holders were compelled to surrender bonds with endorsement for redemption by December 12, 2008. While the total amount payable to investors against each bond of Rs 3,600 was Rs 1.1100000 in 2014 at the end of 20 years, the new enactment allowed for terminating the bonds by making a premature payment of Rs 50,000 only on January 10, 2009. The investors thus suffered a loss of Rs 61,000 per bond. A total of 4.500000 people have invested in SSNNL bonds and the state government expects to save around Rs 4,0000000000 by their early redemption. It was this very development that forced the Kalyan Janata Sahakari Bank Limited of Gandhinagar and two other investors from Indian Oil Corporation to move the court, challenging the March 2008 Act as well as the November 2008 notice. Arguing on behalf of the petitioners, advocate K S Nanavati submitted before the bench on Thursday that SSNNL was not empowered to redeem the DDBs. He said that when the bonds were issued in 1993, there was no clause with regard to redemption and hence the SSNNL had no power to redeem the bonds now. He said that when the government, by virtue of an Act, empowered the SSNNL to redeem the bonds, it was largely unknown to the public, and hence the premature payment of the bonds amounted to breach of conditions. He further submitted that by issuing a notice, SSNNL had now made it compulsory for all investors to surrender the bonds, which again amounted to breach of a tripartite agreement among the state of Gujarat, the SSNNL and those declared as trustees of the DDBs. He submitted that it would be an irreversible damage to investors once the bonds are surrendered as desired by SSNNL, and requested the court to treat the matter as a Public Interest Litigation (PIL) and grant interim relief for the same. Vehemently defending the state government, advocate general Kamal Trivedi, however, said that no bond holder would face any damage due to the state government’s decision. He argued that if the petition succeeded, the state government would pay the full maturity amount of Rs. 1.1100000 in 2014. He, however, opposed any interim relief to the investors. Advocate B N Bhatt appeared on behalf of the Securities and Exchange Board of India (SEBI). While adjourning the matter for final hearing on December 18, the court said that if any party or individual intended to file an affidavit-in-reply, he/ she is at liberty to do so.