Thursday, the Supreme Court gave the green light at the Center to divest its 29.54 percent residual shares in Hindustan Zinc Ltd (HZL).
The highest court also led a CBI investigation into alleged irregularities in the process of divesting 26% of government shares in the company in 2002.
The judgment, which came following a petition filed by the National Confederation of Leaders of the Association of Central Public Sector Enterprises and a few others, including a former employee of HZL, will allow the government to pursue the divestment of HZL and to collect income for other public purposes. by unloading the residual stake estimated at Rs 40,000 crore on the open market.
What is the history of HZL?
The Metal Corporation of India Limited was incorporated in 1944 as a public limited company under the Companies Act of 1913. On August 2, 1976, the President issued the Metal Corporation (Nationalization and Miscellaneous Provisions) Ordinance. This ordinance was replaced by the Metal Corporation (Nationalization and Miscellaneous Provisions) Act 1976.
When was HZL divested?
The Union government took steps to divest its stake in HZL in 1991-92. In the first tranche, the government divested 24.08 percent of its stake in the domestic market. Of this total, 12.54 percent was acquired by financial institutions, 7.58 percent by corporations and non-resident Indians, and 3.96 percent by Indian nationals. HZL was listed on the stock exchange. As a result of the divestment, the Union government was left with a 75.92 percent stake in HZL.
The second tranche of the divestment in HZL took place following the decision of the Union government to divest 26 percent of its stake in HZL to a âstrategic partnerâ. A shareholders’ agreement and a share purchase agreement were signed on April 4, 2002 with Sterlite Opportunities & Ventures Ltd., which was chosen as a strategic partner. The government therefore divested 26 percent of its capital in HZL in favor of SOVL, leaving it only 49.92 percent of the capital.
On April 10, 2002, SOVL acquired 20 percent of the shares of HZL on the open market through a mandatory open offer, in accordance with the standards of the Securities and Exchange Board of India. As a result, SOVL’s stake in HZL increased to 46 percent. The shareholders’ agreement provided for two purchase options. SOVL exercised its first option to purchase 18.92 percent of the stake in August 2003, which was transferred to it in November 2003. As a result, SOVL became a majority shareholder with a stake of 64.92 percent in HZL.
What complaints have been filed against the divestment of HZL?
In November 2003, a PIL was filed in the Jodhpur High Court of Rajasthan by a certain Rajendra Kumar Razdan, challenging the second tranche of the divestment. The SC stayed the proceedings and transferred this and other similar requests to themselves. They were made redundant in August 2008.
On October 31, 2012, Maton Mines Mazdoor Sangh filed a petition with the SC challenging the proposed divestment of the residual shareholding of the Union government. This request was summarily dismissed by the SC on December 10, 2002.
Following this, the National Confederation filed a brief request in February 2014.
What was the petition from the National Confederation looking for?
The petition called on the government and the Ministry of Divestment to refrain from divesting the remaining 29.54 percent stake in HZL without amending the 1976 Nationalization Act and an instruction to the CBI to periodically file progress reports. before the SC concerning the investigation carried out by it, so that it can be controlled by this Court until the filing of the indictment before the competent court.
What was the CBI case?
The CBI opened a preliminary investigation into alleged irregularities during the divestment of the 26 percent of the shares held by the Union government to the benefit of the SOVL in 2002 on November 6, 2013. In March 2017, the agency decided file a closing report.
What has the Union government argued?
Opposing the petition, the Union government declared that it was prohibited by the principles of res judicata since the SC had rejected a petition on the same issue by the written petition of Maton Mines Mazdoor Sangh on December 10, 2012.
But the SC rejected this claim, saying that the 2012 dismissal was “in limine, without a substantive judgment on the merits of their claim” and therefore “the present motion in brief is not prohibited by res judicata”.
The court said that “while determining the applicability of the principle of res judicata under Article 11 of the Code of Civil Procedure of 1908, the Court must be aware that serious questions of public interest are not lost. in the woods simply because a petition was originally filed and dismissed, without substantial judgment on the merits. There is a tendency for poorly argued public interest litigation to be filed instantly after a media disclosure, with the conscious intention of securing a dismissal from the court and preventing real litigants from reaching out. the Court in the public interest. This Court must be aware of the contemporary reality of âpublic interest litigation ambushâ and interpret the principles of res judicata or constructive res judicata in a manner that does not prevent access to justice. Jurisdiction under Article 32 is a fundamental right in itself â.
What did the SC say about the CBI probe?
The SC noted that there were differences of opinion regarding the closure. While the special prosecutor at the CBI headquarters in New Delhi, the director of prosecutions and the special director recommended closure, the additional director of CBI and others recommended turning the preliminary investigation into a regular case.
The court, which reviewed the documents, said they “satisfied the conscience of this Court for exercising its exceptional powers to order the CBI to investigate the case” and that “a prima facie case of a recognizable offense, as mandated in … the CBI manual, has been established in this case. âThe SC ordered that the registration of an ordinary case be followed byâ a full investigation âand ordered that progress reports be tabled before him.
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