No case,AG had said before CBI bid to reopen HZL stake sale

Vahanvati’s opinion came in response to a query from the mines ministry on the HZL disinvestment.

Written by Amitav Ranjan | New Delhi | Published:October 18, 2013 3:43 am

A fortnight before the CBI reopened in August the disinvestment of Hindustan Zinc Ltd by the NDA government more than a decade ago,the UPA government’s top lawyer had said that there was no case for challenging that executive decision now merely because it lacked parliamentary approval.

Attorney General G E Vahanvati,it has emerged,had advised the mines ministry that the sale of HZL to Anil Agarwal’s Sterlite Opportunities & Ventures Ltd could not be legally challenged now as it was neither contested at the time of the sale in 2002 nor after the first call option in November 2003.

Vahanvati’s opinion came in response to a query from the mines ministry on the HZL disinvestment.

“Therefore,not only was there no challenge at the relevant point of time to the sale of shares in 2002 or the further offloading in 2003,these actions have been fully implemented. Thus,these transactions had been completed and cannot be reopened much less in 2013,10 years after the event,” Vahanvati said.

“It need hardly be said that courts do not lightly interfere with longstanding decisions,especially those in which over time,people have settled their business in accordance therewith. Too much water has flown under the bridge and it is not possible to put the clock back,” the AG had written on August 5.

On August 20,the CBI decided to take a fresh look at the strategic sale and sought records from the mines ministry on how HZL was privatised without the approval of Parliament when it was created by acquiring the Metal Corporation of India Ltd (MCIL) through a parliamentary statute.

The CBI demanded the “entire record pertaining to HZL related to nationalisation of MCIL,disinvestment of HZL in favour of Sterlite Opportunities and the opinion of the attorney general on Sterlite’s call option”. It also sought details of officers who were associated with the process of disinvestment.

The AG’s latest opinion was in response to the mines ministry asking him if the HZL sale to Sterlite could be reversed as no parliamentary approval was taken to privatise the nationalised company.

The query stemmed from the Supreme Court’s 2003 order that stopped the disinvestment of Bharat Petroleum and Hindustan Petroleum saying that it could be done only after amending the acts that nationalised them.

Vahanvati’s argument is that the apex court had passed “a limited order” on September 16,2003 stopping the government from selling shares of HPCL/BPCL even as it dismissed the government plea that this was similar to the divestment of Maruti Udyog Ltd.

“It is necessary to point out that in the case of MUL,which was on a similar basis,the Supreme Court held that in the case of MUL there was no challenge to the disinvestment even though it was done by executive action and,therefore,this case stood on a different footing,” the AG told the mines ministry.

He said a similar situation now existed for HZL as facts presented by the ministry showed that the government sold 24.08 per cent of HZL’s stake in the domestic market in 1992 and another 26 percent to Sterlite Opportunities & Ventures in March 2002 – much before the HPCL judgement.

“The share sale in the first instance was effected prior to the Supreme Court HPCL judgement and a further offloading of 18.92 percent took place on 11 November,2003 after the judgement. Significantly,there was no challenge at any time to the disinvestment already made in March 2002 or to the further offloading which took place in November 2003,” the AG said.

“Therefore,not only was there no challenge at the relevant point of time to the sale of shares in 2002 or the further offloading in 2003,these actions have been fully implemented. Thus,these transactions had been completed and cannot be reopened much less in 2013,10 years after the event,” he argued.

The AG also cited a writ petition filed by Maton Mines and Mazdur Sangh to “declare the initial disinvestment in 2002 to be void ab initio and against the law of the land” that was dismissed by a three-judge bench of the Supreme Court in December 2012.

“The petition was filed under Article 32 of the constitution,and the dismissal of the petition would be the end of the matter with regard to reversing the status quo since this prayer was made and rejected,” he recorded.

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