GOLDSTONE EXPORTS LIMITED Vs. GOVERNMENT OF ANDHRA PRADESH

JUDGEMENT

(1.) In the process of implementation of 'Policy of Public Enterprises Reforms', the Government of Andhra Pradesh (GoAP) decided to accept the proposal of Delta Paper Mills Limited (DPML), fourth respondent herein, for a joint venture in respect of three sugar units and a distillery unit as recommended by two Committees. The decision of the first respondent in preferring the fourth respondent to the petitioners' consortium is assailed in the writ petition. The matter was heard at length on 22-4-2002, 25-4-2002, 26-4-2002,3-6-2002, 4-6-2002, 5-6-2002,6-6-2002, 11-6-2002 and 13-6-2002 at the admission stage itself as the contesting parties filed their counter- affidavits and made detailed submissions. BACKGROUND FACTS IN BRIEF:

(2.) The lengthy pleadings and voluminous documents filed in the case reveal the following factual position. (i) Unsolicited proposals of Gelcon

(3.) Nizam Sugars Limited (NSL), which is a Government owned/public enterprise, had five sugar units and two distillery units. In furtherance of a policy to implement economic reforms, the GoAP decided in 1996-97 or thereabout to disinvest/privatize various industrial units of NSL. In February, 2001 sale of seven units of NSL was advertised. Initially, acceptable bids were received for two sugar mills and one distillery unit; namely, Madhunagar Sugar Mill, Latchayyapeta Sugar Mill and Mombojipalli Distillery. While the finalisation of the transaction in relation to these three units was in the process, the petitioners herein (except Ganapathi Sugars Limited, seventh petitioner herein) led by the first petitioner, namely, Goldstone Exports Limited (GEL) formed into a consortium (special purpose investment company) styled as GELCON and entered into discussions and negotiations with the GoAP. This appears to have culminated in the petitioners (except seventh petitioner) submitting unsolicited proposal on 12-10-2001 in respect of four units of NSL including the distillery unit, namely, Shakarnagar Sugar Mill, Shakarnagar Distillery, Mombojipalli Sugar Mill and Metpally Sugar Mill in Andhra Pradesh. The proposal envisages that the Government/ NSL will incorporate a new company (NEWCO) under the companies Act, 1956 in the name and style of 'NSF LIMITED' at an appropriate time and transfer four unsold undertakings along with identified assets to NEWCO. Initially, the Government/NSL will hold 100% share-holding of the Company, which will have paid-up equity capital of Rs. 20 Crores. The value of the transferred assets to NEWCO would be taken as Rs. 45 crores for the purpose of issuing equity/preference shares and Optionally Convertible Debentures. GELCON will contribute Rs.9.50 crores as equity capital and Rs.0.05 crores as preference capital immediately on signing a sale and purchase agreement and raise Rs. 0.70 crores as equity and Rs.14.3 crores as preference capital within six months thereafter. The unsolicited proposal submitted by GELCON also gave a brief history of the GEL and its associates who formed consortium as well as their financial position. (ii) Implementation Secretariat; structure and process of bids evaluation