Breaking the divestment deadlock

We are not final because we are infallible, we are infallible only because we are final.8217;8217; This candid and oft-quoted remark of an...

We are not final because we are infallible, we are infallible only because we are final.8217;8217; This candid and oft-quoted remark of an American judge comes to mind as the Cabinet Committee on Disinvestment is set to meet on October 3 to find a way of getting over the Supreme Court8217;s controversial judgment in the BPCL/ HPCL case. The odds are stacked against the government because, whether the Supreme Court claims to be infallible or not, its decision is nevertheless final. Nobody can appeal against a Supreme Court judgment. There is no higher appellate body.

The most the government can do in the circumstances is to file a review petition or, alternatively, a petition seeking a clarification of the judgment delivered last month. Generally, the chances of a review petition being allowed are remote. It will go before the very judges who heard the case in the first place, Justice S. Rajendra Babu and Justice G.P. Mathur. Worse, they don8217;t even have to hear the government in the court. The judges will first read the review petition in their chambers and have the option of dismissing it right there as happens most of the time. The review petition will come up for hearing only if Justices Babu and Mathur deign to acknowledge that they committed 8220;errors apparent on the face of the record.8221;

Therefore, a more pragmatic option before the government is to file a petition that asks the judges merely to clarify their judgment. Though the same judges will deal with such a petition too, they cannot wriggle out of giving a hearing in the court to the government. Moreover, it involves better psychology because the lordships will not be asked to overturn their own verdict but rather only to clarify its import. The clarification petition may not however help the government disinvest in nationalised undertakings like BPCL and HPCL without repealing or amending the laws concerned. It may at the most secure a clarification from the court that, despite indications to the contrary in the September 16 verdict, the government need not take Parliament8217;s approval for disinvesting in any company it had set up purely under an executive decision for example, BALCO.

Besides these two options, the government is reportedly exploring the extraordinary possibility of requesting the Supreme Court to set up a Constitution bench of five judges to resolve an economic crisis precipitated by the judgment of a two-judge bench. If a Constitution bench is indeed set up for this purpose, it promises to be more effective than other options in undoing the damage to the disinvestment process. The larger bench can completely overrule the September 16 verdict and restore status quo ante. But then, however strong Disinvestment Minister Arun Shourie8217;s motivation to meet his disinvestment targets, it remains to be seen whether the government as such will have the political stomach to engage in such a major legal battle in the last year of its term.

Whatever recourse the government adopts, the apex court should face up to the fact that it had acted in a rather cavalier manner while dealing with a case of great public importance. Being fallible is one thing, being cavalier, quite another. The latter verges on judicial indiscipline. As part of a two-judge bench, Justice Rajendra Babu was bound by last year8217;s verdict in the BALCO case delivered by a three-judge bench which upheld the government8217;s right to implement its disinvestment policy. Yet, as discussed in the last column, he came up with the sweeping proposition that since every PSU is set up with money drawn from Consolidated Fund of India, no disinvestment can take place without Parliament8217;s approval. This invalidates all the disinvestments that have taken place so far Modern Foods, Maruti, BALCO, etc because the government never obtained Parliament8217;s approval for any of them.

Such a drastic compromise of executive power was not contemplated even by the petitioners who challenged the latest round of disinvestment in BPCL and HPCL merely because it was going to reduce the government to a minority shareholder. They had no objection to the disinvestment that took place in the early 8217;90s when the government8217;s 100 per cent stake in the two oil majors was brought down to 66 per cent in BPCL and 51 per cent in HPCL. They were aggrieved only by the further disinvestment proposed this year because the reduction of the government8217;s stake below 51 per cent would, according to them, violate the laws under which the two government companies were vested with the assets acquired from multinational companies. The petitioners therefore contended that the government cannot disinvest in HPCL/BPCL without amending or repealing the laws concerned. The government may disagree with this contention but it cannot question Justice Babu8217;s authority to uphold it. What can be 8212; and should be 8212; questioned is his attempt to dismantle the entire disinvestment process.