NEW SETBACK - SC restrains govt from divesting HZL shares

Verdict To Hit Plan To Raise Over `20,000Cr

In a setback to the government's disinvestment plans, the Supreme Court on Tuesday stalled the proposed sale of its 29.5% equity in Hindustan Zinc (HZL), the erstwhile public sector company where Anil Agarwal's Vedanta is now the majority owner.The NDA government had in 2002-03 divested its majority stake in HZL and Bharat Aluminium Company (Balco) and was looking to exit the two companies. The finance ministry was keen to offload its remaining 29.5% share in HZL and a 49% stake in Balco, hoping to raise over Rs 20,000 crore, based on the current market price. The option was to either sell the remaining shares to Vedanta or explore other routes such as auction on the stock exchanges or a public offer.

The government had bud geted for disinvestment of Rs 69,500 crore this year, with Rs 41,000 crore expected to come from the minority stake sale in PSUs and Rs 28,500 crore from the strategic sale.While the government is way below the asking rate, the residual stake sale in HZL and Balco was not part of the budgeted disinvestment target. The finance ministry had sought legal opinion on the issue but had not received a clear view at a time when government officers were not keen to push through the sale, fearing adverse comments from the Comptroller and Auditor General later. But, the SC ruling seems to have sealed the fate of selloff in these two companies after the National Confederation of Officers' Associations of Central Public Sector Undertakings had filed a PIL two years ago questioning the Centre's decision to completely exit HZL, which has in the last 12 years turned into a profitmaking venture.

A bench of Chief Justice T S Thakur and Justices A K Sikri and R Banumathi said, “What is the compulsion for you to disinvest? Don't disinvest immediately . Why should you be in a hurry to disinvest and hand over lakhs of crores to a private company . There will be no disinvestment in this company without prior permission from the court.You (government) did it without amending the law before does not mean you can do it again. One transgression does not mean you will be allowed to commit another transgression. Is there any basis for the government to say it does not want to keep any control over erstwhile PSUs? What is the grave necessity for this?“