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NEW DELHI, Oct. 17

AN embarrassed Disinvestment Ministry has sought details from Mr A.L. Batra, owner of Batra Hospitality Pvt Ltd, on the sale of Mumbai Centaur Hotel Airport to the Sahara India group.

Mr Batra last week sold the five-star Centaur Hotel Airport property in Mumbai, which he had acquired from Air India's subsidiary, Hotel Corporation of India (HCI), in June this year for Rs 83 crore, to the Sahara India Group for Rs 115 crore.

And, the Disinvestment Ministry just can't do anything about it.

This is a first-of-its-kind episode in the country's short history of PSU disinvestment, highlighting one of the many perils that the Government faces in its privatisation programme.

The agreement signed between the Government and Mr Batra while transferring the Centaur property on a slump sale basis as a going concern (i.e., the entire business is transferred to a new owner) does not preclude the sale of the hotel to a third party.

"When we have sold the property lock, stock and barrel to a private party, how can you prevent him from selling it to a new buyer? It's like selling your house to somebody and telling him that he cannot sell it to anybody else," a Disinvestment Ministry source said.

However, all the clauses and conditions contained in the agreement including the one on retrenchment of workers will be valid and binding on Mr Batra and his assignees and successors for a certain period.

As such, all the representations and warranties for which Mr Batra is committed to under the agreement will flow to the new buyer as well; in this case, the Sahara India group.

But, this would have to be incorporated in the new agreement signed between Mr Batra and Sahara India, the sources said.

Mr Batra would have complied with all the conditions for which he is liable to the Government when he sold the 288-room Centaur Mumbai to Sahara India but for one small hitch.

The land on which the property is located belongs to the Airports Authority of India (AAI), which had given it on lease to HCI for building and operating the hotel for a 30-year period. When the hotel property was sold, AAI had changed the land lease deed in favour of Mr Batra, the new owner.

"Now that Batra has sold the property to Sahara India, AAI should agree to transfer the land lease in favour of the new buyer," the sources said. Otherwise, there could be a problem.

Even if AAI agrees to the transfer of land lease for a second time, Sahara India will have to abide by the conditions on use of land and buildings of Centaur Mumbai as per the master plan of that city.

"Sahara India will have to run Centaur as a hotel and not use it for anything else, including locating its corporate offices," the sources said.

In case, there is any infringement by Mr Batra on the original agreement, the only recourse available to the Government would be to approach a court of law. That is something the Disinvestment Ministry can ill-afford at this delicate stage in the privatisation process.

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