Cabinet okays Cairn India stake sale

* Law Ministry says no legal objection to transaction

Written by Express News Service | New Delhi | Published:January 25, 2012 12:09 am

The Cabinet Committee on Economic Affairs on Tuesday approved majority share sale of Cairn India Ltd to Vedanta Resources Plc after the Law Ministry clarified that there was “no legal or constitutional objection to the Petroleum Ministry’s proposal” for the transfer.

The Petroleum Ministry had sought fresh approval in view of the Home Ministry’s pointers to alleged global and domestic “transgressions” by Vedanta Group and its subsidiaries.

While giving no objection certificate to Vedanta’s purchase of a majority stake in Cairn India from the national security point of view,the Home Ministry on November 25 pointed to eight instances of Vedanta or its affiliates being involved in cases of default of payment,human rights violations or environmental damage.

The Oil Ministry consulted the Home and Law ministries,among others,“to bring on record” these transgressions and claimed that the issues highlighted by the Home Ministry did not have a “direct bearing on the country’s security per se”.

The Law Ministry on January 2 sided with the Oil Ministry’s proposal stating that it was in accordance with its earlier opinion and also as per the recommendations of the Group of Ministers. It further said that the issue “being a policy matter,there appears to be no legal or constitutional objection to the Petroleum Ministry’s proposal”. The Home Ministry,on January 3 said it had “no further comments to offer on the draft note for CCEA”.

The planned sale of a 40 per cent stake held by Cairn Energy Plc in Cairn India Ltd to Vedanta was first considered by the CCEA in April 2011 and approved in June 2011,with certain pre-conditions. Cairn and Vedanta complied with the pre-conditions and concluded the transaction last month for $8.48 billion.

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