Date:22/01/2003 URL: http://www.thehindu.com/2003/01/22/stories/2003012206130100.htm

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Legislation not needed for PSUs disinvestment: Sorabjee

By Alok Mukherjee

NEW DELHI JAN. 21. With the go-ahead given by the Attorney-General, Soli Sorabjee, that neither parliamentary legislation nor its sanction or approval was necessary to give effect to the decision to disinvest two public sector oil companies, a final decision on the issue is likely to be taken by the Cabinet Committee on Disinvestment (CCD) later this month.

The Disinvestment Minister, Arun Shourie, today handed over to the Prime Minister, Atal Behari Vajpayee, the legal opinion of the Attorney-General relating to the disinvestment of the PSUs, the Hindustan Petro Chemicals Limited (HPCL) and the Bharat Petro-Chemical Limited (BPCL). While the matter did not figure at the Union Cabinet meeting today, Mr. Shourie indicated that the CCD might take it up later this month, after the return of the Deputy Prime Minister, L.K. Advani, from his foreign tour on January 25. In his communication to the Government, the A-G is understood to have reiterated that his opinion was confined to the sole question of whether there was any necessity for parliamentary legislation or approval for the in-principle decision of disinvestment of the two oil companies and not about the legal merits of the form and content of the actual ultimate decision of disinvestment.

The A-G is understood to have expressed the view that after examining the memorandum of association and the articles of association of both the companies, he was of the opinion that the documents did not impose any requirement of parliamentary legislation or securing its approval for the sale of shares of the companies. There is also no provision in the Companies Act which states that decisions or actions of Government companies — whether it be a voluntary winding up or merger or amalgamation or disinvestment by sale of shares resulting in change of management — require parliamentary legislation or sanction.

After scrutinising the Acts, which resulted in the nationalisation of the erstwhile Esso, Caltex and Burmah Shell — the first two became HPCL and the last, BPCL — Mr. Sorabjee is understood to have opined that there were no specific provisions which prohibited the carrying on of business of production, refining and distribution of petroleum products by any private entity. Therefore, there was no implied prohibition in the Acts which resulted in the acquisition of these companies which inhibit disinvestments.

On Section 620 (2) of the Companies Act — which prescribes that every notification proposed to be issued under sub-section (1) of Section 620 should be laid before each House of Parliament and also contemplates Parliamentary approval in specified matters — the A-G is understood to have said that unlike in the State Bank of India Act or the Reserve Bank of India Act or the Banking Companies (Acquisition and Transfer) Act, the legislation resulting in nationalisation of the two oil companies did not have such provisions.