The Supreme Court today issued a notice to the central government on a public interest petition challenging the decision to disinvest public sector oil companies Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corporation Ltd (BPCL).
The petition argues that the companies cannot be privatised without the approval of Parliament.
Counsel for the Centre for Public Interest Litigation, Prashant Bhushan, argued that the two companies were created by three parliamentary enactments between 1974 and 1977.
The assets and shares of Esso, Burmah Shell, and Caltex were taken over by these three laws to set up HPCL and BPCL. The declared objective of these laws was to ensure that the distribution and marketing of petroleum products were regulated by the government in order to serve the common good.
According to these laws, the assets and oil distribution businesses of these firms must remain with the state or other public sector undertakings until these enactments are amended or repealed.
Privatisation without parliamentary approval will, therefore, be unconstitutional, the petition argues.
"While the government can adopt any policy it wants, no executive action can be taken in violation of a parliamentary enactment," it says.
The government had sought the opinion of Attorney-General Soli Sorabjee, who had reportedly said a parliamentary approval was not required for effectuating the "in-principle policy decision of disinvestment".
However, he said his opinion had not been sought on the legal merits of the decision, which would be clear from the modalities of the shareholders' agreement between the government and the strategic partner.
The notice was issued by a Bench comprising Justice S Rajendra Babu and Justice G P Mathur. The government had on January 26 decided to sell its 34.01 per cent stake in HPCL to a strategic investor and divest 38.2 per cent in BPCL through an open offer.
