Ambarish Mukherjee

New Delhi, July 28

In a further twist to the Bharat Aluminium Company (Balco) divestment saga, the Government is likely to return the Rs 1,098-crore cheque given by strategic partner Sterlite Industries for the purchase of the residual 49 per cent stake in the company.

The cheque amount was based on the valuation done by SBI Capital Markets for sale of the residual stake, which is still with the Government.

The Government is now contemplating the public issue route to offload a portion of its holding.

A proposal to this effect is currently waiting to be placed before the Cabinet Committee on Economic Affairs (CCEA) for formal clearance, sources told

Business Line

.

Since the Government did not part with its stake within the stipulated timeframe as sought by Sterlite, the company had also sent a legal notice to the Government alleging breach of shareholders' agreement.

Following the notice, the Ministry of Mines, the administrative Ministry concerned, sought legal opinion from the Attorney General of India, who stated that the shareholders' agreement, which gives the first right of refusal to Sterlite, was against the Companies Act.

Therefore, the Government was not bound to sell its share to Sterlite and is also entitled to take the public issue route if it wants to raise funds by selling Balco shares, the Attorney General is understood to have opined.

A Committee of Secretaries eventually considered the proposal of Balco selloff and decided not to go against the legal opinion expressed by the Attorney General.

The panel's decision had been endorsed by the administrative Ministry and has been sent to the Cabinet for consideration, sources said.

(This article was published in the Business Line print edition dated July 29, 2006)
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