BANGALORE: The Union Government will go by the opinion given by the Attorney General of India, Milon Banerjee, on selling the residual 49 per cent stake held by the Government in the erstwhile public sector enterprise Balco to the strategic partner Sterlite Industries Limited, a top Union Mines Ministry official said here on Friday.

"We will go with the Attorney General, who said that do not sell the residual stake to Sterlite,'' A. K. D. Jadhav, Secretray, Union Ministry of Mines told The Hindu here on Friday.

The shareholders' agreement signed by the Government and Sterlite in 2001 while selling a majority stake of 51 per cent in Balco by the Government to Sterlite had granted the first right of refusal to Sterlite for buying the residual stake in the company through a call option. But, the AG has said in his opinion that this clause violated the Companies Act.

In accordance with the shareholders' agreement, Sterlite had exercised the call option to buy the residual stake in Balco from the Government and had even given a cheque for Rs. 1,098 crore in this regard.

Legal notice

Following the Government's refusal to accept the cheque and sell the residual stake, Sterlite had sent a legal notice to the Government alleging breach of the shareholders' agreement and also filed a petition in the Delhi High Court. During a recent hearing on the case, the Delhi High Court asked both parties to settle the dispute within four weeks.

The Delhi High Court verdict has put the Mines Ministry in a bind, particularly when a proposal has been submitted to the Cabinet Committee on Economic Affairs (CCEA) for selling the residual stake through the public offer route as favoured by the Attorney General.

Though the Mines Ministry says that it will abide by any court verdict in this regard, it does not preclude the possibility of going in for an appeal against any adverse ruling given by the Delhi High Court while disposing of the petition. "We might go in for an appeal,'' Mr. Jadhav said while swearing by the AG's opinion and adding that the Mines Ministry would visit the CCEA once again to seek its opinion and firm up a stand on the next course of action.

If both parties failed to reach a consensus, then the matter could be referred for arbitration as per the shareholders' agreement.

Arbitrator appointed

The former Chief Justice of India, S. P. Bharucha, has been appointed as nominee arbitrator.

The Delhi High Court has posted the matter for further hearing in the first week of September.

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