HPCL sale: Naik sends a letter that reads put on hold

Unlike previous attempts where his emphasis was on the strategic nature of the sector, this time Naik’s argument is that the issue was sub-judice being heard by the Supreme Court.

‘‘Since the matter is sub-judice, it may not be appropriate to take further steps such as formulating the agreements in consultation with the (shortlisted) parties, inviting the parties to visit the HPCL sites and Data Room,’’ Naik says in a letter sent to Disinvestment Minister Arun Shourie on August 18, 2003.

‘‘Such steps,’’ he warns, ‘‘may not help in containing the employees’ discontent and unrest against the ongoing disinvestment process…I, therefore, suggest that we may postpone commencement of data room and site visits by the shortlisted parties until the cases are heard and decided by the Supreme Court.’’

Top sources said that this wasn’t a reason to delay the process. ‘‘It has also been told to the HPCL union that the process cannot be held back just because the matter is sub-judice,’’ said a senior official.

Due diligence, or a detailed scrutiny of the company’s assests and liabilities, by the bidders is necessary before the price bids can be called from them.

Though there is no official response from the Disinvestment Ministry on Naik’s request, sources said that visit to the data rooms could be delayed on security concerns. ‘‘Nobody wants a repeat of the Nalco experience where one of the bidders were beaten up by the employees,’’ they said.

The due diligence is planned for Thursday with the simultaneous opening of the data rooms for Reliance Industries in Mumbai and Delhi.

Naik’s second argument for putting on hold the process is that in case the apex court were to give an adverse verdict, ‘‘the actions initiated by the government may be rendered infructuous and we may have to retrace our steps.’’

In January, the Cabinet Committee on Disinvestment approved sale of 34.01 per cent government share in HPCL to a strategic partner through competitive bids.

But four writ petitions were filed against the decision to disinvest its majority share in HPCL and Bharat Petroleum Corporation Limited. A key allegation was that since the two oil firms were nationalised through an act of parliament, the decision to privatise them should have also been through a parliamentary act.

The Disinvestment Ministry’s stand, after taking the legal opinion of the Attroney General, was that parliamentary legislation was not necessary for an ‘‘in -principle’’ policy decision to disinvest in both firms.

‘‘It is open to the government in bona fide exercise of its executive power under Article 73 read with Article 298 to reach and implement the said decision,’’ the ministry said in its reply to the Supreme Court.