The Supreme Court on 19 January 2016 restrained the government from divesting its 29 percent stake in Hindustan Zinc Ltd (HZL) till further orders, which is likely to delay the bid by Vedanta Resources Plc to take full control of the company.
Pulling up the government, a bench of Chief Justice T.S. Thakur, Justice A.K. Sikri and Justice R. Banumathi asked: “What is the compulsion to divest now? Why are you in hurry? You have already committed a violation when you divested in 2002 and this does not mean we will allow you to sell the remainder of the stake without amending the law ((Metal Corporation (Nationalization and Miscellaneous Provisions) Act, 1976).”
The court’s observation came as Attorney General Mukul Rohatgi sought to defend the government decision to offload its remaining stake in HZL.
Rohatgi contended that HZL had ceased to be a government company after the 2002 disinvestment and the government was no longer interested in continuing with it.
Noting that the government still held important rights in the Hindustan Zinc Ltd, the bench said that the petitioner – National Confederation of Officers Association – were not questioning the policy of disinvestment per se but the manner the entire thing was being done.
The court noted that neither HZL was a loss making company nor disinvestment was in larger public interest.
As senior counsel C.A.Sundaram appearing for Vedanta Resources told the court that when it took over the company 14 years back, it was a loss making entity but now it is running into profits, the court said: “You have no right to demand anything. You will purchase (the stakes) only when we allow them (the government) to sell.”
Prashant Bhushan, the counsel for the petitioner, National Confederation of Officers Association, told the court that if an illegality was committed in 2002, it could not be perpetuated.
He said the 29 percent government stake could not be divested without parliamentary approval.
During the earlier NDA regime in 2003, the Vewdanta Resources had acquired majority stakes both on HZL and Balco. It was the valuation of the transfer of these stakes from the government to Vedanta Resources that led to a Central Bureau of Investigation (CBI) probe in 2013.
Pointing to the snail pace at which CBI probe was going on, Bhushan told the court that so far the CBI had only registered a preliminary enquiry against Vedanta promoter Anil Agarwal and unknown officials in the matter and no FIR has been filed yet.