The Hindu Business Line : Court allows divestment in Jessop

A DIVISION Bench of the Calcutta High Court comprising the Chief Justice, Mr A.K. Mathur, and Mr Justice Ashim Kumar Banerjee, by a composite judgement today, allowed the appeal of Union of India, whereby the issue of disinvestment with regard to stake of Union of India in Jessop & Co Ltd (JCL) does not have any embargo at the moment.

Challenging the order of the Trial Court passed on April 10, 2003, Bharat Bhari Udyog Nigam Ltd (BBUNL) filed an appeal against Jessop & Co Ltd Staff Association (Association).

Ruia Cotex Ltd (RCL), the purchaser of shares of Union of India in JCL, for Rs 18.18 crore, filed appeal against the association; the Government filed appeal against the association, which in turn filed an appeal against Board for Industrial and Financial Reconstruction (BIFR). All the appeals have been heard analogously and a single judgement was passed.

The association filed a writ petition challenging the Government move to disinvest its share in JCL to RCL, but the Trial Court passed an order of stay against it.

RCL went up to the Supreme Court, challenging the order of Division Bench of Calcutta High Court, but the apex court directed the Trial Court to dispose of the pending application. The association disputed the sale of stake as the matter was pending with BIFR. The court, however, directed BIFR to hear the matter without passing any final decision.

The association claimed JCL was an industry coming under strategic sector but the Government rejected this, and BBUNL supported the contention of Union Government. Mere manufacturing of Railway ancillaries cannot recognise any establishment as being in the strategic sector.

The court, while dismissing the appeal of the association, observed that the association has nothing to do with the modus of BIFR and hence, cannot challenge the functioning of BIFR. The court held that the association had no locus to challenge the decision-making process of the Union Government.

The court admitted the contentions of Government, holding that during disinvestment process the interests of the employees shall be safeguarded.

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