HC notices on AEC takeover

The Gujarat High Court has issued show cause notices to the state government and nine others on a special civil application challenging the takeover of the Ahmedabad Electricity Company (AEC) by the Torrent group. The notices were issued by a division bench comprising chief justice KG Balakrishnan and justice MS Shah on Wednesday and were made returnable on November 30. The petition sought to challenge a government resolution dated July 16, 1997, which detailed the decision of selling off the 28.89% stake of the Gujarat government in Ahmedabad Electricity to Torrent Power, a subsidiary of the Ahmedabad-based Torrent group. The petitioners, a trustee of Indian Investors’ Protection Council Arvind Gupta and an Ahmedabad Electricity shareholder of Pravinsinhji Jadeja, said the utility’s shares were earlier sold to the government-owned Gujarat State Investments at an average price of Rs 580 a share. Now, the decision to sell these shares to the Torrent group at Rs 117 a share willcause a loss of Rs 460000000 to the exchequer. The decision was also taken without making a public offer or inviting competitive bids, the petitioners’ counsel Satendra Jhaveri argued. The government initially sold 1O% equity and the balance would be sold at any time at Rs 117 a share without further notification under the terms of the resolution under challenge, Jhaveri said, pleading for an interim stay on the transfer of shares, which the court, however, refused to grant. The petition stated that SU Mehta, being common director of Torrent Power and Ahmedabad Electricity, himself had negotiated and finalised the terms of the sale of equity in violation of the Securities and Exchanges Board of India (SEBI) substantial acquisition and takeovers’ regulations, 1997. The petitioners also pleaded that the Gujarat government be restrained from selling 12.38% of Ahmedabad Electricity shares held by Gujarat State Investments Corporation. They also demanded the court to direct the government to disinvestits shareholding only by auction and competing bids.Other respondents in the case are department of energy and petrochemical secreatry, SEBI, RBI, FIPB, UTI, Bombay Electric Supply Company, Ahmedabad Electricity Company, GSIC and Torrent Power.