The next date for arbitration hearings on the terms of sale of the government’s residual 49 per cent stake in Bharat Aluminium Company (Balco) to Sterlite Industries is January 31. A three-day hearing by a panel of three retired judges of the Supreme Court concluded today.
The judges heard arguments from both the government and the company from Wednesday.
“No conclusion has been drawn so far,” said a source. Former law minister Shanti Bhushan represented Sterlite Industries and senior counsel A K Ganguli represented the government’s case during the hearing.
Sterlite, a subsidiary of London-listed Vedanta, bought 51 per cent of Balco in March 2001 for Rs 552 crore, when the National Democratic Alliance government decided to divest the government’s stake in the public sector company. Sterlite had the right to buy the remaining stake after a three-year period, but ran into differences with the government over valuation.
After the embargo expired in March 2004, Sterlite sent the government a call notice and a cheque of Rs 1,099 crore for Balco’s residual stake, in accordance with the shareholders’ agreement.
But, differences in the value of the government’s residual stake came up after the United Progressive Alliance came to power in May 2004 and the issue was referred to the Attorney General, who termed the call option invalid under Section 111A of the Companies Act. He said, however, that the residual stake could be sold at the market price.
In 2006, Sterlite moved the Delhi High Court for interim relief, to ensure the government did not sell the stake to anyone else. The high court asked for reconciliation and arbitration.
The government accordingly directed a committee of secretaries to explore ways to reconcile the issue. In May last year, the committee of secretaries recommended that to discover the correct price of the stake in the unlisted company, the government should sell 10 per cent in an initial public offer (IPO). In July, the Cabinet Committee on Economic Affairs approved the IPO after the ruling UPA parted ways with the Left parties.
Sterlite, however, rejected the IPO on the ground that it holds the right to buy the residual stake, after which the dispute went to arbitration this year. If the arbitration fails, the case may be settled before a Supreme Court bench.
The government, meanwhile, has accelerated its move to divest stake in a number of public sector units. The government has asked all ministries to compile a list of state-run companies for partial sale of stake and listing on stock exchanges. The government says it is also keen on speeding the long-pending Balco issue.
