NEW DELHI: The Central Government has decided to return the cheque of Rs. 1,098 crore given by Sterlite Industries as payment for residual equity in Balco while setting up a committee of secretaries to go into the entire issue of the company's valuation.

The erstwhile public sector aluminium company's disinvestment had become controversial when 51 per cent shareholding was sold to Sterlite in 2001, but the sale of the balance 49 per cent has also run into problems over valuation. The Delhi High Court has directed the government to negotiate with Sterlite on the issue while granting four weeks to settle the matter.

The Cabinet Committee on Economic Affairs, therefore, on Thursday decided to set up a committee of secretaries headed by the Law Secretary to consider the issue and take "due diligence" of the report by the Comptroller and Auditor General (CAG) on the price and valuation while negotiating the sale of the remaining equity.

According to the Information and Broadcasting Minister, Priyaranjan Dasmunsi, other members of the committee will be Disinvestment and Mines Secretaries with the Cabinet Secretary to oversee the group.

He said it had been decided to return the cheque of Rs. 1,098 crore sent by Sterlite to the Finance Ministry in March.

The committee of secretaries will consider the CAG's report which said that in the case of four public sector companies, including Balco, efforts were not adequate to get the title deeds to the land and buildings and this impacted the valuation of the properties adversely.

Mr. Dasmunsi said the Government had sold 51 per cent stake in the PSU to Sterlite in 2001 for Rs. 551.50 crore at a price of Rs. 49.01 a share. Sterlite had claimed the residual equity citing the call option under the share purchase agreement it had reached with the Government in 2001. In March 2004, Sterlite sent a call notice for acquiring the remaining 49 per cent of Balco shares.

The issue, however, remained stalled on the valuation issue. Subsequently, Sterlite sent a cheque, which it claimed, was as per the valuation done by the Government in March.

The Centre, however, did not encash the cheque and sought legal opinion.

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