Date:15/04/2003 URL: http://www.thehindu.com/2003/04/15/stories/2003041504281200.htm

National

SC notice to Centre on HPCL, BPCL disinvestment

By J. Venkatesan

NEW DELHI APRIL 14. The Supreme Court today issued notice to the Centre on a petition questioning its controversial decision to disinvest equity shares in Hindustan Petroleum Corporation Ltd. and the Bharat Petroleum Corporation Ltd.

A Bench, comprising Justice S. Rajendra Babu and Justice G.P. Mathur, issued notice on a petition from the Centre for Public Interest Litigation, which mainly assailed the decision on the ground that it had been taken without the approval of Parliament.

The petition said that Parliament passed the ESSO (Acquisition of undertaking in India) Act in 1974 and after the takeover it became HPCL. Similarly, in 1974, by an Act of Parliament, the Burma Shell Company became BPCL.

In pursuance of its disinvestment policy, the Government of India in December last started taking steps towards selling the two oil companies. On December 23, 2002, a report of the Standing Committee of the Petroleum Ministry was laid on the table of the Lok Sabha.

In the report, the committee had opposed the disinvestment in two oil companies and it was also stated that disinvestment could not be done without Parliament approval. When members raised the issue, the Government announced that it would seek the views of the Attorney-General, Soli Sorabjee, on the issue.

On January 20, the Attorney-General gave an opinion that no parliamentary approval was required for effectuating the policy decision of the Government. He said that his opinion was not sought on legal merits on the decision which would depend on the provisions of the shareholders agreement between the Government and the selected strategic partner.

On January 26, the Cabinet Committee on Disinvestment approved the proposal of the Disinvestment Ministry to sell 38.2 per cent of equity shares of the BPCL and 34.01 per cent equity shares of HPCL.

The petition contended that it appeared from these steps that the Government intended to complete the sell-off without seeking approval from Parliament or amending or repealing the two acquisition Acts. It argued that the decision was illegal and unconstitutional as the Government could not take an executive action which was in direct conflict with any parliamentary enactment.

The petitioner sought a direction to restrain the Government from proceeding with the disinvestment in HPCL and BPCL in a manner so that they would cease to be Government companies, without the approval of Parliament and without amending the two acquisition Acts.