Hindustan Zinc Disinvestment Case: Supreme Court Commences Hearing

The Supreme Court on Monday commenced hearing on the plea by National Confederation of Officers' Associations of Central Public Sector Undertakings and one more petitioner in the Hindustan Zinc disinvestment case.Advocate Prashant Bhushan opened the arguments for the petitioners, telling the bench of Justices D. Y. Chandrachud and B. V. Nagarathna how the Metal Corporation of India was nationalised by an Act of Parliament in 1965 and incorporated as Hindustan Zinc. "The Act of the Parliament stated that the government has the power to vest it in a government company. So it was vested in a government company. Sometime around 2000, the government divested a very substantial part of its shares in it, thereby rendering it to cease to be a government company in the technical sense, in the sense of the government holding being left at 29.5%. At that point of time, some employees challenged that disinvestment. That writ petition was dismissed in limine in 2012. Then we came to know that the government is proposing to disinvest even these 29.5% shares that they have which gives them any valuable rights- Under the Companies Act, if you hold more than 29% shares, it gives you several valuable rights over the company. Meanwhile, we also learnt by this time that the HPCL disinvestment judgment (CPIL v. UOI; 2003) had come where it was held by the Supreme Court that if an Act of Parliament says that an undertaking is nationalised and can only be vested in a government company, then you cannot disinvest so as for it to cease to be a government company without a Parliamentary legislation", he submitted."Meanwhile, we also learnt that a complaint to the CBI was filed by the brother of a petitioner in this case that the original disinvestment was done dishonestly, at an undervaluation, and therefore, ought to be enquired into. The CBI registered a PE (Preliminary Enquiry) which went on for many years. We have filed an affidavit where we have learnt that the investigating officer, the head of branch, the Director of prosecution- everybody said that this is a fit case for it to be converted into a Regular Case and for an FIR to be lodged. Despite that, it appears that the PE was closed. Despite the fact that this court's judgment in Lalitha Kumari clearly says that any complaint disclosing a cognisable offence should be rendered into an FIR, and that in certain very small percentage of cases, there may be a preliminary enquiry done within seven days only to determine whether the complaint makes out an offence or not. Then you decide whether to register a case or to dismiss it. But there also, a copy of reasons has to be given to the complainant as to why the preliminary enquiry was not converted into an FIR", he continued.Mr. Bhushan then took the bench through the earlier orders passed in this case-(1) order of January 19, 2016 stating "Issue rule. Post for final hearing. Status quo as it exists today with regard to proposed disinvestment of government interest in Hindustan Zinc shall be maintained pending further orders from the court. Status report submitted by the CBI shall be kept in a sealed cover" "By that time, apparently they had not closed the preliminary enquiry. They said we are still continuing with the enquiry", said Mr. Bhushan.(2) order of July 4, 2020 stating, "List after two weeks. In the meantime, CBI to file preliminary enquiry report in a sealed cover""So by this time, they said that we have completed the preliminary enquiry and we have found it unfit to register a regular case and therefore, the court said all right filed the preliminary enquiry report in a sealed cover", commented Mr. Bhushan.(3) Thereafter, an application was made by Vedanta Corporation saying that there is some arbitration which is held up because of this interim order of status quo regarding the proposed disinvestment, on which the court made a further order of August 13, 2020 which effectively says that Arbitration can go on unimpeded by the status quo order passed by the court", continued the advocate.Justice Chandrachud asked for the dates on which the disinvestment progressively took place in the company. Senior Advocate Harish Salve, for Vedanta, of which Hindustan Zinc is a subsidiary, responded, "24.08% shares were disinvested in 1991-92. The government was left with 75.92. It continued to be a government company. In 2002, 26% were disinvested and the government share came to 49. In April, 2002, Vedanta acquired this 26%""On the date of the judgment of our court in CPIL, this company had ceased to be a government company?", asked the judge. "Probably", said Mr. Bhushan."Not 'probably', yes, it had ceased to be a government company", replied Mr. Salve."Considering there is no challenge to the earlier decision when disinvestment of 1991-1992 etc took place, as a result of which government stake falls below 50%, then can we apply the principle which has been laid down in the HPCL judgment?", asked Justice Chandrachud.Mr....

Hindustan Zinc Disinvestment Case: Supreme Court Commences Hearing

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