The Supreme Court on Thursday allowed the Centre to disinvest its remaining 29.5 stakes in Hindustan Zinc Limited (HZL) and directed the CBI to register a regular case into its 2002 disinvestment.
A bench headed by Justice D Y Chandrachud said HZL had ceased to be a government company after the initial disinvestment and that the government was only a shareholder and therefore free to sell its shares.
“There is no challenge to the disinvestment which took place in 1991- 1992 or 2002, the latter has resulted in HZL ceasing to be a government company. That being the position, it would be inconsistent to read an implied limitation on the transfer by the government of its residual shareholding in HZL representing 29.5% of the equity. The government now acts as any other shareholder in a company to be able to transfer shares on the basis of financial and economic exigencies”, it ruled.
The ruling also pointed to irregularities in the 2002 disinvestment process and said while what was agreed upon was the sale of 25% shares, what was actually sold was 26%.
The court said that the advertisement for sale was confined to 26% equity and that it did not mention that a complete road map for the sale of the company had been decided and the remaining shares would also be sold eventually to a strategic partner.
It further said, “We abstain from commenting on some crucial facts and names of individuals involved so as to not cause prejudice to the investigation of the matter…the registration of a regular case followed by a full-fledged investigation must be conducted”. The court also directed that it be appraised of the status of the investigation.
The SC had dismissed a plea challenging the disinvestment in 2012.
In 2016, on a plea by the National Confederation of Officers Association, the SC asked the Government to maintain the status quo on any further disinvestment.