Yesterday was the first time that Oilex disclosed publicly that GSPC had failed to meet several cash calls, and was some $10.8 million in the red.

Zeta, which now owns 10.3% of Oilex, is seeking orders that funding agreements it entered into earlier this year are void, and it is seeking costs and damages.

Oilex has around $15 million in cash.

"Leading up to Oilex's capital raising, Oilex had instead previously (and on a number of occasions) announced to the market that GSPC was a strong and supportive joint venture partner," Zeta said yesterday.

It says that the company should have disclosed the true position of the Cambay JV, in which GSPC has a 55% interest, when the company was seeking to raise $30 million earlier this year.

"Had Zeta known of the true position at the time of its decisions to invest were made, it would have had a different view as to the prospects of Oilex and it would not have made its investments in Oilex," Zeta said.

Zeta was not informed of the true position relating to GSPC at any time before it entered into the funding agreements, it said.

Zeta has paid more than $4.5 million to Oilex since July under the funding agreements, which were to have funded two new wells and five workovers to enhance gas production from the Cambay Field.

Oilex's funding agreement included a fully underwritten $7 million rights issue, a first tranche placement to raise $1.8 million and a second tranche placement to raise $21.2 million, subject to shareholder approval.

As part of the second tranche placement, Zeta had agreed to subscribe for some $9.5 million worth of shares, but settlement was deferred following a significant shortfall in the Oilex rights issue.

The settlement was supposed to be finalised by yesterday.

Oilex shares halved yesterday to $0.015, before it called a trading halt.

According to an article on India's Economic Times website, Oilex has offered to buy out GPSC's share of the field, because the state-owned oiler is understood not to have the funds available to meet its share of the approved work program.

Oilex has proved up contingent resources of 720 billion cubic feet of gas and 52.8 million barrels of condensate in the Cambay field, which sits in Gujurat state, India's industrial heartland.