This is to write that vide reference, Managing Director, Andhra Pradesh Heavy Machinery & Engineering Limited (APHMEL), (subsidiary of the SCCL) has submitted demerger proposal of APHMEL as required under A.P. Reorganisation Act, 2014 to the Expert Committee under the Chairmanship of Smt. Sheela Bhide, IAS (Retd) appointed to approve the demerger plans of institutions which are listed under Schedule IX of the AP Reorganisation Act. Through the reference 2nd cited, Expert Committee has given its recommendation to the effect that APHMEL shall pass to the residual state of Andhra Pradesh in its entirety in terms of Section 53(1) of the A.P. Reorganisation Act, 2014 since its all the assets and liabilities are located in that State.
The recommendation of the Expert Committee is not only in gross violation of the provisions of the AP Reorganisation Act, but also contrary to the proposal submitted APHMEL itself. Further, the said recommendation was given disregarding the objections raised by A. K. Goel, IAS (Retd), one of the members of the committee.
The brief facts of the case are as follows: Due to the continuous insistence by the erstwhile Govt. of Andhra Pradesh, the SCCL acquired 81.54% of equity in APHMEL in 1998-99 and APHMEL became subsidiary of SCCL. The other shareholders are: Andhra Pradesh Industrial Development Corporation (APIDC) 5.79%, erstwhile Government of Andhra Pradesh 0.86%, public shareholders 11.81%.
In pursuance of instructions issued by the Expert Committee, MD, APHMEL submitted a demerger proposal as approved by EGM dated 1.4.2017 and sought for: “apportionment of 0.86% of equity of APHMEL amounting to Rs.14, 90,100/- held by erstwhile Govt. of AP between the successor States of AP and Telangana in the ratio of 58.32: 41.68 as mentioned in the Act i.e., allocation of 86,903 equity shares to the present GOAP and 62,107 equity shares to the Govt. of Telangana being the only issue to be resolved under the AP Reorganisation Act, 2014 with respect to APHMEL.”
However, to the utter surprise and disregarding the provisions of the A. P. Reorganisation Act, the expert committee gave a recommendation to the effect that APHMEL shall pass on to the residuary state of Andhra Pradesh in its entirety. The point by point objections to the expert committee recommendations are appended to this letter. The principal objections are:
1. The expert committee relied under the provisions of sections 68 and 53 of the AP Reorganisation Act, which govern the matters related to apportionment of assets, rights and liabilities of companies and corporations listed in Schedule IX of the Act. It is brought to your notice that APHMEL is a subsidiary company of SCCL. The apportionment of APHMEL is linked to SCCL apportionment. The present shareholding of SCCL, as per section 92 and schedule 12 of the Act is: 51% of the equity is with the Government of Telangana and 49% of the equity with Government of India. Hence, as far as APHMEL is concerned, the entire equity of 81.54% whose ownership is with SCCL is now to be apportioned between Telangana and Central Governments in the same ratio i.e., 51% and 49% respectively. It is a well-known principle in law that when there is a specific provision in the act, the general provisions applicability is circumscribed to that extent. In the instant case, as APHMEL is a subsidiary of SCCL, which is now jointly owned by Telangana and the Central Governments, the only issue to be decided is the apportionment of ownership regarding 0.86% of shares owned by the then Government of Andhra Pradesh. Hence, the recommendation of the expert committee, passing on the entire APHMEL, based on inappropriate application of law, is in gross violation of the provisions of the AP Reorganisation act.
2. The MD, APHMEL has acted rightly in proposing the bifurcation of 0.86% of shares only and this was also pointed out by one of the members of the committee, A. K. Goel. In utter disregard of the proposal and the dissent note, the committee went ahead and has given a recommendation that APHMEL shall pass on to the residuary state of Andhra Pradesh.
3. The recommendations of the expert committee, if acted upon, would not only cause irreparable loss and damage to the state of Telangana but also to Central Government as SCCL is a joint company of Telangana and the Central Government.
Considering the all the above facts, it is requested that Government of India to set aside the recommendation of the expert committee and issue directions under section 71(a) of the Act regarding the division of interests in the shares of the then Andhra Pradesh state in APHMEL and protect the interests of Telangana and Central Government. Pending issuing a final direction under the said provision, it is prayed that an interim direction suspending the recommendations of the expert committee may be given, at the earliest, as it is apprehended that Andhra Pradesh may resort to unilateral taking over of the valuable assets of APHMEL, as they are located near Vijayawada.
