CEL: Centre may invite fresh bids for CEL after charges of rigging

The Centre is in favour of inviting fresh bids for the divestment of state-owned Central Electronics Ltd (CEL) following discussions with the law ministry, said people with knowledge of the matter. Allegations of multiple lapses and suppression of facts against the winning bidder call for a restart of the process, they said. The Centre will, however, wait until July, when a case filed by CEL employees on the matter is scheduled to be heard.

As for the divestment of Pawan Hans, stuck over a matter involving a member of the winning consortium, the Centre is planning to hold discussions with other entities that had submitted bids. It hasn’t paid for a company acquired in bankruptcy proceedings in 2019.

“In the case of CEL, the law ministry is of the opinion to scrap the process and invite fresh bids,” said one of the persons, adding that the Centre had sought its opinion on both CEL and Pawan Hans.

The Centre had approved the sale of CEL in November last year to Nandal for ₹210 crore. The transaction was scheduled to be completed by March.

Letter of Intent Not Issued Yet

However, the employees’ association moved the Delhi High court, alleging that both bidders for CEL were related companies and there were anomalies in the process.

The matter was picked up by opposition parties, following which the Centre decided to put the sale on hold and seek a legal view on its future course of action.

The inter-ministerial group looking at the CEL sale hadn’t come across any lapses over valuation and was of the view that the process had been followed with due diligence as per the law, while pointing to the allegations that both companies were inter-related, which is against the spirit of competitive bidding, said the people cited above.

The Centre has sought to ensure that the process is fair and transparent and can cancel the sale if there is any deliberate suppression of fact, said the people cited above.

“The Letter of Intent (LoI) has not been issued yet and legally the Centre can re-invite bidding,” an official told ET, maintaining that any final call will be taken after July 11, which is when the CEL case will be heard next.

PAWAN HANS SALE

The divestment of state-owned helicopter service provider Pawan Hans was halted by the Centre after a key constituent of the successful bidder received an adverse order from the Kolkata bench of the National Company Law Tribunal (NCLT). The bench questioned the financial health of the Cayman Islands-based Almas Global Opportunity Fund SPC (AGOF), majority stakeholder in Star9 Mobility Pvt Ltd, the winning bidder for Pawan Hans. The order was in light of AGOF not having paid Rs 578 crore to take over EMC Ltd as of April this year, after having bid for the company during insolvency proceedings in October 2019, putting a question mark over its financial viability and capacity to turn around the fortunes of the company.

The Department of Investment and Public Asset Management (DIPAM) is in favour of holding discussions with the winning consortium and other bidders this month, officials said. The core group of secretaries on divestment will take a final call based on input they get from these talks, they said.