NCLT ruling in way, so Govt takes another look at sale of Pawan Hans

The consortium entity that placed and won the bid for the state-owned helicopter service provider is Star9 Mobility Pvt Ltd. Cayman Islands-based Almas Global Opportunity Fund, which is managed by Dubai-based Almas Capital owns 49% of Star9 Mobility, with the remaining held by Mumbai-based Big Charter Pvt Ltd and Delhi-based Maharaja Aviation.

On April 29, a group of ministers, comprising Road Transport & Highways Minister Nitin Gadkari, Finance Minister Nirmala Sitharaman and Civil Aviation Minister Jyotiraditya Scindia, approved Star9 Mobility’s bid for sale of the Centre’s 51% stake in Pawan Hans for Rs 211.14 crore.

However, nine days prior to the approval on April 20, the Kolkata bench of the NCLT had passed an order against Almas Global Opportunity Fund saying that the entity was in “knowing and wilful contravention of the approved resolution plan”.

“We will do legal examination of the NCLT order before proceeding further. The letter of award (for the Pawan Hans disinvestment) has not been issued yet,” a Department of Investment and Public Asset Management (DIPAM) official involved in the Pawan Hans disinvestment process told The Indian Express.

As per guidelines issued by the DIPAM in September 2017, “any conviction by a Court of Law or indictment/adverse order by a regulatory authority that casts a doubt on the ability of the bidder to manage the public sector unit when it is disinvested, or which relates to a grave offence would constitute disqualification”.

The resolution plan in question pertains to a Kolkata-based power distribution company EMC Ltd for which Almas Global Opportunity Fund was declared the successful bidder. But despite having its resolution plan for EMC Ltd approved by the NCLT, the fund did not deposit the money required for the resolution process.

“The SRA (Successful Resolution Applicant) has not exhibited any intention by taking some concrete steps that can instil some degree of confidence in the earnestness of the SRA. It is plain for anyone willing to see that the SRA is not likely to part with the funds in the foreseeable future. The SRA has taken the entire process for a ride, and nothing can really excuse this audacity. The attitude of the SRA really will tick every parameter that can be applied to satisfy the ‘knowing and wilful contravention’ test laid down in section 74(3)46 of the Code on a reasonable construction,” the NCLT noted in its April 20 order.

“The SRA has been pussyfooting around with regard to the payments to be made under the approved Resolution Plan, for more than one-and-a-quarter years. It is futile to wait indefinitely for the SRA to fulfil its commitments… The repeated exhortations made during the course of hearings to the SRA through its learned senior counsel to make at least some payments in order to show its bona fides, & earnestness have gone completely unheeded. There is no point in chasing the chimera of the SRA fulfilling its commitments under the Resolution Plan,” it said.

The bankruptcy court had also ordered action against Almas Global Opportunity Fund and its officers under Section 74 (3) read with Section 236 of the Insolvency & Bankruptcy Code, 2016. These sections stipulate that the party can be imprisoned for a minimum of one year and maximum of five years, in addition to facing a maximum penalty of up to Rs 1 crore.

With the Pawan Hans disinvestment being approved by the group of ministers, the steps that remain before the transaction closes include issue of the letter of award, signing of the share purchase agreement and handing over of the stake to the new owners. While the government plans to divest its 51% stake in Pawan Hans, the Oil and Natural Gas Corporation (ONGC) also plans to sell its 49% stake in the helicopter company on the same terms as agreed upon by the Centre.