1. In terms of Orissa Electricity Reform Act, 1995 the Government of Orissa embarked upon participation of private sector in the electricity industry. In terms of the said Act, the Government of Orissa also framed rules for hiving of distribution of electricity to four distribution companies by vesting with these companies the responsibility of distribution and supply of electricity and also region-wise assets owned by Orissa Electricity Board and the Government of Orissa. All the four companies (DISCOMS)were originally 100% subsidiaries of the petitioner, namely, Grid Corporation of Orissa Ltd. (GIRDCO). BSES Limited which is now known as Reliance Electricity Limited (REL)- private sector investor- acquired 51% shares in three of these DISCOMS- the first respondent company in each petition. GRIDCO is the bulk supplier of electricity to these distribution companies. Various agreements were entered into between the DISCOMS, REL and GRIDCO viz shareholders' agreement, bulk supply agreement, loan agreement and Escrow agreement. The management of these three companies is vested with REL. In terms of the Escrow agreement, all the realization by these distribution companies were to be deposited in the escrow account to be directly paid to GRIDCO as bulk supply tariff supply of electricity. REL assumed control of these distribution companies on 1.4.1999. During the initial period, after taking over control by REL these three distribution companies defaulted in payment for bulk supplies to GRIDCO and also towards repayment of the loans (the consideration for the assets transferred by GRIDCO to these companies was treated as loans to be repaid over a period of time). Accordingly, the quantum of defaulted amount by these three DISCOMS was quantified at Rs. 350 crores for the period between 1.4.1999 and 31.8.2000. GRIDCO also owed substantial amount of money to NTPC for the power supplied by NTPC to GRIDCO. Therefore, the distribution companies agreed to issue bonds known as NTPC bonds, for a sum of Rs. 350 crores in favour of GRIDCO which would assign these bonds in favour of NTPC. Accordingly, bonds were issued in favour of GRIDCO, which transferred these bonds in favour of NTPC. Later on, GRIDCO discharged its liabilities to NTPC which reassigned these bonds again in favour of GRIDCO. In the present petitions, the main allegation of GRIDCO are that the distribution companies have failed to discharge the bonds on maturity and that in their annual accounts, the distribution companies have adjusted certain amounts against the bonds and have transferred the bond amount to GRIDCO receivable/payable account. There are further allegations that REL being the majority shareholder is not bringing funds by way of equity share capital to meet the liability towards GRIDCO and other creditors inspite of the readiness of GRIDCO to have shares issued against its dues from the companies and that there have been various acts of mismanagement in the affairs of the companies.

2. With these allegations, the petitioner has sought for directions to REL to bring in sufficient funds to the extent of 51% with permission to GRIDCO to subscribe to 49% by way of adjustment of the dues from these companies to GRIDCO; to direct REL to provide necessary technical managerial support to the distribution companies; to direct the companies to rectify its accounts in regard to the debentures; to direct the companies to complete transfer formalities for transferring 10% of the equity by GRIDCO to the Employees Welfare Trust and for reconstitution of the board of these companies by appointment of independent directors including MD/WTD having professional competence.

3. Since the facts and allegations are common in respect of all the three petitions, it was agreed that the petition relating to SOUTHCO would be heard and a common order covering all the three petitions could be passed. Accordingly, CP 61/2008 was heard and this single common order is being passed in respec