CCEA forms panel on Balco call option

CABINET DECIDES

The Cabinet Committee on Economic Affairs (CCEA) today decided to set up a committee of secretaries of the departments of legal affairs, disinvestment and mines for finalising the government's position on the ongoing legal battle with Sterlite Industries.

Sterlite, which owns 51 per cent stake in Bharat Aluminium Company (Balco), has given a call option notice for acquiring the government's 49 per cent stake in the company. The matter was referred to the Attorney General (AG) by the government in 2006 after a dispute over valuation.

The AG declared the call option as 'ultra-vires' of the Companies Act, 1956. Sterlite has challenged this in the Delhi High Court.

Parliamentary Affairs Minister Priyaranjan Dasmunshi, who briefed reporters after the Cabinet meeting, said since the issue was in the court, the committee of secretaries would consider the government's position in the case as well as the ongoing mediation and arbitration.

The mines ministry has told the CCEA that according to the shareholders' agreement, the Centre may be forced to sell its remaining 49 per cent stake in Balco at 75 per cent of the pre-determined price if Sterlite's right is upheld in the arbitration process.

"If the arbitration award goes against the government, it may have legal and financial implications," the ministry said in a note to the CCEA.

Official sources said former information and broadcasting secretary Pawan Chopra might be involved in the arbitration process.