Blow to GVK as HC allows Bidvest to sell Mumbai airport stake to a third party

The court order allowed Bid Services Division (Mauritius) Ltd, a unit of the South African company, to sell its 13.5% stake, on the grounds that GVK Power had failed to show any “readiness and willingness" to buy Bidvest’s stake despite it having the first right to buy the shares.

The Adani group, which emerged as the top bidder to develop and operate all six state-run airports that were bid out earlier this year, had made a formal offer to some of the minority investors in MIAL to buy out their stakes, The Economic Times had reported in April.

MIAL runs the Chhatrapati Shivaji International Airport in Mumbai. GVK owns a 50.5% stake in MIAL, while Bid Services Division and ACSA Global Ltd hold 13.5% and 10%, respectively. The remaining 26% is held by state-run Airports Authority of India.

“A section of the media is saying that this benefits a certain conglomerate. However, one must note that GVK group still holds the majority stake in MIAL," said a GVK group official, who didn’t want to be named. A GVK group spokesperson said the company doesn’t have any comments to offer on the matter.

India is set to become the world’s third-largest air traffic market in 10 years, according to the International Air Transport Association.

GVK has avoided “scrutiny of the court" to show its financial means and capacity to complete the transaction, Justice Sanjeev Narula said in the order.

Despite several rounds of negotiations to reach an out-of-court settlement, GVK didn’t show a “genuine inclination" to complete the transaction, the court said. GVK had said it had the money needed to acquire the overseas investor’s stake in MIAL but failed to prove it, said the judge.

“A party desirous of specific performance of a contract for purchase cannot merely on the strength of an agreement and purported breach seek an order of injunction," the court ruled. “The entire case law relating to specific performance of contract ubiquitously holds that readiness and willingness is a key feature that is required to be met in order to succeed in such action. The petitioner has remained conspicuously silent on this issue in its correspondence and also before this court."

“Petitioner’s statement that it is ready to fulfil its obligations is not enough. The same has to be substantiated by its conduct and by establishing the same by means of documentary evidence," it said.

GVK Power had a consolidated debt of ₹11,355.18 crore as on 31 March, according to Bloomberg.

Rhik Kundu in Mumbai contributed to this story.