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P. Manoj

NEW DELHI, March 15

THE Ministry of Disinvestment has sought the Attorney-General's opinion on whether it can proceed with the strategic sale of Government equity in Sponge Iron India Ltd without violating the Supreme Court verdict on the Samatha case relating to transfer of tribal land.

``The Law Ministry has said that there are no hiccups in moving ahead with the disinvestment process in Sponge Iron, but advised the Disinvestment Ministry to take the opinion of the AG before proceeding forward,'' a senior official with the Disinvestment Ministry told Business Line.

The disinvestment process in Sponge Iron has been stuck over the issue of transfer of tribal land owned by the company located in Andhra Pradesh, the State in the context of which the Samatha judgement was given by the apex court. The Samatha judgement was notified by the Andhra Pradesh Government. According to the Andhra Pradesh Land Transfer Regulations Act, the State Government has notified that any transfer of tribal land to a non-tribal person is invalid. Sponge Iron owns the land on which the company is located after purchasing it from the Andhra Pradesh Industrial Infrastructure Development Corporation (APIIDC).

But, the land is located in a scheduled tribe-certified area, and hence, there is a total prohibition of transfer of land owned by the company. The Disinvestment Ministry, however, feels that the transfer of shares of the company to a strategic buyer does not mean transfer of land. ``During the strategic sale, the ownership of the company changes hands from the Government to the private sector. But, the identity of the company which owns the land remains intact and would serve a public purpose whether the company is owned by the Government or a private sector,'' the official explained.

Besides, the Government has built in several safeguards in the shareholders' agreement to prevent the sale of land by the strategic partner of Sponge Iron, he argued.

The Disinvestment Ministry's argument has also been bolstered by the Supreme Court verdict in the Balco disinvestment case, which also involved allegations of transfer of tribal land. ``The giving of land to Balco on lease was in compliance with the provisions of Section 165 (6) of the Revenue Code. Moreover, change in management or in the shareholding does not imply that there has now been any transfer of land from one company to another. "If the original grant of lease of land and permission to transfer in favour of Balco between the years 1968 and 1972 were valid, then, it cannot now be contended that there has been another transfer of land with the Government having reduced its stake to 49 per cent,'' the apex court had observed during the Balco judgement. Interpreting the Balco judgement, the Union Minister for Disinvestment, Mr Arun Shourie, had said: ``The land had been given to Balco. It remains with Balco after disinvestment. It becomes no less tribal because of disinvestment."

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