The Mumbai High Court has ruled that the Maharashtra Electricity Regulatory Commission (MERC) has the exclusive jurisdiction to adjudicate the dispute between an affiliate of the beleaguered Enron Corporation and its trading partner, the Maharashtra State Electricity Board (MSEB).

In a landmark decision, the court ruled that MERCs jurisdiction supersedes the international arbitration agreement signed between the MSEB and India's Dabhol Power Company (DBC), in which Enron has a majority stake. The judges noted the social and public policy role of the Electricity Regulatory Act, 1998, under which MERC was established.

Leave to appeal

The DPC petition argued that MERC has no jurisdiction in the dispute because it came into existence five years after the 1993 agreement signed by the power company and MSEB. The Mumbai court has however given leave for DPC to appeal against their latest decision in the Supreme Court.

Justices Ajit Shah and Vijaya Tahilramani also ruled that the Supreme Court's 6 August 2001 and 1 March 2002 order concerning the $US28 million letter of credit (L/C) would continue. The DPC had hoped it would be able to use the L/C to obtain from MSEB overdue payments, which the MSEB (with considerable popular and political support) had claimed were based on extortionately high power charges.

The Supreme Court had ordered that the L/C "shall not be enforced until after 6 weeks of the disposal of the writ petition by the Mumbai High Court".

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