The Supreme Court today issued notices to the Centre, Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation Ltd (BPCL) on the back of a public interest petition challenging the disinvestment of the two oil giants. The court also issued notices for stay of the disinvestment process.
The crucial point, as senior counsel F S Nariman pointed out, was whether nationalised corporations could be privatised by executive orders. According to Nariman, it can be done only by parliamentary legislation.
The Bench, comprising Chief Justice V N Khare and Justice S B Sinha, stated that several other petitions raising the same question would be heard together after replies were received from all the parties concerned.
The petition, moved by the Oil Sector Officers' Association, is likely to be taken up again after a few weeks.
The petitioners in all the cases have argued that corporations that came into being through Acts of Parliament can be denationalised only by such Acts. The oil corporations were nationalised in 1974 by passing three Acts of Parliament.
After examining the acquisition laws, Attorney-General Soli Sorabjee had said in January there was no need for parliamentary approval on disinvestment. The boards of the companies have the power to take decisions on mergers and closures.
Government corporations need to get approval from Parliament only in specified cases, and coal mines and banks are in this category. It was pointed out that when 119 textile mills were acquired and 66 of them closed down, the government did not seek the approval of Parliament.
On January 26, the government decided to sell its 34.01 per cent stake in HPCL to a strategic partner and offload its 35.02 per cent stake in BPCL through public offerings in domestic and overseas capital markets.
After the proposed disinvestment and offer of 5 per cent stake at concessional rates to employees, the government's shareholding in HPCL was to come down to 12 per cent and that in BPCL to 26 per cent.
The two corporations together have 40 per cent share in the $15 billion oil retail market.
