The government is set to scrap the winning bid for the sale of helicopter service provider Pawan Hans and may not seek fresh bids for the defence public sector enterprise, thus scrapping its disinvestment altogether, two senior officials said asking not to be named.
The strategic disinvestment of Pawan Hans has been attempted four times since 2016 without success.
This would mark the second disinvestment after Central Electronics Limited to have been scuttled due to legal issues post the completion of the disinvestment process.
“The IMG (inter-ministerial group) has taken the decision to not go ahead with it… the NCLAT has dismissed the plea but IBBI (Insolvency and Bankruptcy Board of India) has gone ahead and initiated prosecution, so it does not make the case for the government to proceed (with the winning bidder),” the official said, seeking anonymity as the legal process for cancelling the bid is ongoing.
The winning bidders of both EMC and Pavan Hans are linked entities.
A second official said that since one arm of the government, IBBI had initiated legal proceedings against a bidder in one case, another arm of the government — in this case the department of investment and public asset management (DIPAM)—cannot hand over a public sector enterprise to the same bidder.
“It’s a question of reliability, of the same entity in two different cases. There has to be semblance in the government’s approach,” the official said.
In the case of Pawan Hans, the government had not issued the letter of award to the winning bidder, Star9 Mobility Pvt Ltd, a consortium of three companies led by majority owner Almas Global Opportunity Fund. The consortium had placed a winning bid of ₹211.14 crore for the defence PSU.
The EMC bid was won by Almas.
The government had put the Pavan Hans sale on hold after the Kolkata bench of the National Company Law Tribunal passed an adverse order against Cayman Islands-based Almas Global Opportunity Fund for wilful contravention of an approved resolution plan of EMC Ltd, and forfeited its performance bank guarantee of ₹30 crore.
The tribunal also asked IBBI and the ministry of corporate affairs to lodge a complaint against the company in a special court under the Companies Act, for contravention of the resolution plan, according to which it was bound to pay ₹568 crore to EMC’s creditors.
IBBI has since commenced legal proceedings. Queries to finance ministry remained unanswered.
Pawan Hans’ divestment process was completed nearly five years after the Cabinet Committee on Economic Affairs approved the strategic disinvestment in October 2016.
Source: Mint