The Home Ministry has given its approval to London-listed miner Vedanta Resources' buying majority stake in Cairn India for $8.7 billion.
The Home Ministry, while giving the security no-objection certificate (NOC), highlighted eight areas of concern, including 64 legal proceedings against Vedanta and its subsidiaries in various courts, sources privy to the development said.
The security clearance was one of the conditions that the government had set for Vedanta group buying 40% stake in Cairn India from UK's Cairn Energy Plc.
Cairn Energy and Vedanta have already agreed to the other condition of Cairn India paying cess and royalty on crude oil produced from its mainstay Rajasthan oilfields.
Cairn India does not pay royalty and cess on its 70% share in the Rajasthan block as per the contract, but its current majority owner, Cairn Energy, and new owner Vedanta forced it to accept the government condition of making royalty cost recoverable and paying Rs 2,500 per tonne cess.
Also, the government had a conditioned approval to the deal on ONGC, which has 30% stake in Rajasthan block and pays royalty on behalf of Cairn India, giving its NOC. Oil and Natural Gas Corp (ONGC) has agreed to give NOC if Cairn India accepts to make royalty cost recoverable and pay cess.
Sources said the Ministry's November 25 letter to the Oil Ministry pointed to Vedanta Group's investment in cases of "default of payment, human rights violations, environmental damage in its mining and metal projects etc in India and abroad."
But these concerns did not have a "direct bearing on the security NOC", it said.
The cases highlighted include alleged customs duty evasion by Sesa Goa in iron ore export, case filed by the Directorate of Revenue Intelligence (DRI) against Hindustan Zinc Ltd for which investigation was still in progress and Environment Ministry's rejection of its earlier clearance to Sterlite Industries for mining bauxite from Niyamgiri hills.