SC restrains government on residual stake sale in Hindustan Zinc

A Bench led by Chief Justice T S Thakur questioned the "hurry" being shown by the Centre in offloading its remaining stake in the public sector unit

The Supreme Court on Tuesday ordered status quo till further orders on disinvestment of shares of Hindustan Zinc, earlier a public sector company.

This would stall the move of Vedanta to acquire 29.5 per cent more of the company's shares. It already holds majority stake in the company after it bought a large tranche in 2002.

The order was passed by a Bench headed by Chief Justice T S Thakur on a petition by the National Conference of Officers' Association challenging the earlier disinvestment of 26 per cent, in which the assets were sold to Vedanta for Rs 445 crore in 2002.
 

The association has alleged irregularities in the valuation of shares, arguing that the shares were given at a throwaway price to Vedanta, almost one-fourth of the CAG valuation of Rs 119.

The court had earlier called for a status report from Central Bureau of Investigation. It submitted a report in a sealed cover to the court. Prashant Bhushan, counsel for the association, was allowed to file certain documents in his possession with regard to the disinvestment within four weeks. The court questioned Attorney-General (A-G) Mukul Rohtagi's hurry in disinvesting the remaining shares. It wanted to examine the whole issue and till then, asked the government to hold its hands. It maintained that the government still has a role in the disinvestment though it may not own it.

The process of disinvestment must be examined. The A-G told the court that the government was no longer interested in the business and it is not a government company. Therefore, no sanction was required for disinvestment according to law. Parliament approval was also not required in this case, he said. In any case, it is the government's policy which cannot be scrutinised.

Vedanta counsel C A Sundaram submitted that it was interested in acquiring the shares. When it bought the first tranche in 2002, Hindustan Zinc was a losing company. It has now been turned around and has made Rs 10,000-crore profit. He said that the mineral laws need not be amended for this purpose nor Parliament approval necessary.