Financial Daily from THE HINDU group of publications
Tuesday, Nov 18, 2003
Industry & Economy - Disinvestment
Jessop sell-off case hearing deferred by three weeks SC agrees to review ruling on HPCL
New Delhi , Nov. 17
THE Supreme Court on Monday gave a reprieve to the Government on the stalled disinvestment process in oil PSUs.
The court agreed, in-principle, to reconsider its September ruling on the privatisation of HPCL and BPCL.
This is seen as an indication that the apex court is ready to look at the whole issue afresh.
In early September, the Supreme Court had ruled that the Government should take Parliament's approval for privatising HPCL and BPCL since these two oil firms were nationalised through the relevant Acts of Parliament in the 1970's.
The decision to take a re-look at its earlier verdict was made by a Bench comprising the Chief Justice, Mr V.N. Khare, and Mr Justice S.B. Sinha during the course of a hearing on a petition filed by Jessop & Company Ltd Staff Association challenging a Calcutta High Court judgment upholding the Government's plan to privatise the rail-coach maker.
``We are primarily concerned whether disinvestment requires Parliamentary approval and whether it is legally permitted'', the judges observed.
The observation came after the Attorney General, Mr Soli J. Sorabjee, submitted that though many decisions for privatising the (public sector undertakings) PSUs had been taken prior to the September judgment halting privatisation of oil PSUs for want of prior Parliamentary approval, these have now been challenged in many High Courts on the basis of the HPCL and BPCL ruling.
``The decision of the apex court was not to be applied to all the cases where disinvestment decision was taken prior to the September ruling,'' he said, adding certain observations in the HPCL/BPCL judgment required to be examined afresh as they had far reaching consequences for the Government's disinvestment policy.
The apex court deferred hearing on the petition by three weeks to enable the petitioner to file a rejoinder to the counter affidavit filed by the Government.
Defending the disinvestment of sick PSU Jessop & Co, which was pending before the Board for Industrial and Financial Reconstruction, the Government in its counter affidavit said that the apex court's judgment on HPCL/BPCL was being relied upon by the petitioners to say that the privatisation of the rail coach manufacturer to Ruias was null and void.
The Government said that the judgment needed reconsideration as it had misinterpreted the powers conferred on the executive under Article 298 of the Constitution.
``By virtue of Article 298, the executive power of the Union has been expressly extended to the carrying on of any trade or business and to the acquisition, holding and disposal of property and the making of contracts for any purpose,'' it said.
`` In so far as the judgment holds that Union of India, in exercise of its executive power, is not entitled to dispose of shares acquired by it pursuant to Nationalisation Acts, it is submitted that the said judgment restricts the scope and ambit of Article 298'', it said further.
Consequently, the judgment put in ``jeopardy'' disinvestment of companies and PSUs, which were formed with the Government funds but not acquired under or pursuant to a statutory enactment.
The court also issued notices and stayed further proceedings on petitions pending before various high courts challenging privatisations of Shipping Corporation of India, Hindustan Copper Ltd and Burns Standard Corporation Ltd.
The Government had sought transfer of these petitions to the Supreme Court for an authoritative pronouncement.
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