Panel led by cabinet secy seeks more info on Central Electronics sale

Privatisation of state-owned firm held up after money laundering case against top bidder

A bureaucrats' panel headed by the Cabinet Secretary has sought more information before it decides whether state-owned Central Electronics should be handed over to the shortlisted bidder, Nandal Finance and Leasing.

The Core Group of Secretaries on Divestment (CGD) is learnt to have sought details from the inter-ministerial group (IMG), which is co-chaired by Secretary, Department of Investment and Public Asset Management (DIPAM) and Secretary of the administrative department, about a pending case against Nandal Finance at the National Company Law Appellate Tribunal (NCLAT).

The Registrar of Companies (RoC) has filed a case against Nandal Finance over alleged money laundering. The CGD is the highest bureaucrat-level decision-making body on divestment. The proposals IMG approves go before the CGD, and then final approval is sought from Alternate Mechanism that includes Finance Minister Nirmala Sitharaman, Minister of Roads, Transport and Highways Nitin Gadkari and minister of administrative ministry.  

In November 2021, the centre approved the sale of Central Electronics to Nandal Finance for Rs 210 crore. JPM Industries Ltd. Made a separate bid for Rs 190 crore. In January 2022, the government did not issue a letter of intent (LoI) to Nandal Finance after allegations by employees’ association of Central Electronics that the two bidders had a common director and that there was a pending case against Nadal Finance at NCLAT.

Regarding allegations of the two firms having a common director, the inter-ministerial group had sought the opinion of the legal advisor. The advisor said having common directors is allowed as per the Companies Act, and is not a hurdle to stop the sale.

However, the pending case against Nandal Finance at NCLAT has been a concern as it is learnt to involve serious allegations of money laundering filed by the Registrar of Companies. The RoC has filed a winding-up petition against Nandal Finance.

This has created a situation where one government department has approved the sale of a public sector undertaking (PSU) to a private company and another is pursuing a legal case to wind up that company. This has delayed the sale timeline of Central Electronics and the government is soon expected to decide if it should invite fresh bids.

The government’s efforts to sell two companies hit a setback after winning bidders for Central Electronics and Pawan Hans, a chopper service firm, were found embroiled in legal disputes. It has since then tried including more disclosures, such as a legal declaration by the interested bidders submitting an expressing interest.