OILEX and Zeta Resources have settled a legal dispute, with Oilex agreeing to pay $490,000 in legal costs to the India focused oil project developer.

Zeta had agreed to subscribe for 124 million ordinary shares and loan notes worth over $4 million in Oilex, complementing its 10.3 per cent shareholding at the time.

However, Zeta did not settle the subscription for the convertible notes, claiming Oilex had failed to properly disclose funding defaults by Gujurat State Petroleum Corporation, its partner in the Cambay oilfield in India, and had thus contravened statutory provisions relating to misleading or deceptive conduct.

Oilex had countered by suggesting Zeta was trying to escape paying the final $5.2 million owed under its funding deal.

Neither party will admit liability under the settlement agreement, with both parties dismissing the proceedings that had started in the Federal Court.

Oilex said it had taken into account the significant costs and inherent uncertainty of litigation, and the substantial time commitments and distraction that the action presented to the board and management.

Oilex managing director Joe Salomon said the company could now focus on advancing its operations, which was in the best interests of all shareholders.

Zeta said it would retain its 10.3% shareholding in Oilex, with no further subscription obligations.