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HC admits petition against disinvestment in MFL

Our Legal Correspondent

Chennai , Sept. 24

THE Madras High Court has admitted a writ petition challenging the reported move to disinvest in Madras Fertilisers Ltd.

The First Bench, comprising the Chief Justice, Mr Subhashan Reddy, and Mr Justice A. Kulasekaran, while admitting the petition from the Madras Fertilisers Staff Union ordered that the disinvestment process shall go on, but no final decision should be taken until further orders. The Bench ordered posting of the petition after the Dussera vacation.

In its petition, the union referred to an advertisement in the press intimating the public that the Government of India intended to reduce its shareholdings in MFL to 26 per cent through strategic sale and it wanted to appoint a global adviser to advise and assist in this matter.

According to the petitioner, established in 1966, MFL had been producing various fertilisers - ammonia, urea and complex fertilisers, and thus had met the growing requirements of the farming community in the country. The plant had a capacity of 2,500 tonnes per day, and it had maintained a good record of production, productivity, safety and profitability. Till 1991, the company paid rich dividends, at an average rate of 21.2 per cent, while the industry normal was only 12 per cent. After 1992, the company's performance had eroded to some extent not because of any inherent weakness in the working of the company, but because of the Government's policy of pricing and decontrol.

The paid-up capital of the company stood now at Rs 163.18 crore after the revamp of the plant in 1998. However, due to the pricing policy and the borrowings for the modernisation, the company now has accumulated loss of Rs 227.82 crore as on March 31, 2002.

The Union Minister for Chemicals & Fertiliser, Mr Sukh Dev Singh Dhindsa, had opposed privatisation of the National Fertilisers Ltd, as that move would affect the availability of fertilisers to the farmers at reasonable price. Also, the Standing Committee on Petroleum and Chemicals of the Lok Sabha had opposed the move to disinvest in the public sector fertiliser units.

The petitioner submitted that the interests of the employees would be seriously jeopardised if the MFL isprivatised. The employees of the MFL had been deprived of arrears of wage revision for the period 1997-2000 on the assurance that the Company would pay the same once it earned a profit of Rs 10.5 crore, the petitioner contended.

The petitioner prayed for issue of a direction that the decision of the 1st (Secretary, Ministry of Chemicals & Fertilisers) and 2nd respondents (Secretary, Ministry of Disinvestment) to disinvest the Central Government's shares in MFL and all consequential actions were illegal and unconstitutional.

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