# BALCO EMPLOYEES UNION (REGO.) v. UNION OF INDIA AND ORS

- **Citation:** [2001] Supp. 5 S.C.R. 511
- **Court:** Supreme Court of India
- **Decided:** 2001-12-10
- **Bench:** B.N. Kirpal, Shivaraj V. Patil, P. Venkatarama Redd!
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/balco-employees-union-rego-v-union-of-india-and-ors-18313
- **Pages:** 64

## Headnote

Disinvestnzent:
Disinvestment of 51% equity qf Balco, a Public Sector Undertaking, by
Central Govemnient to a Strategic Partner and transfer o,fnranagement thereofAmenability to Judicial Review-Held, it is cm ec~nomic policy decision qf the
Govenunent and hence not tunenable to judicial review-Constitution o,f India,
1950 -Articles 32 & 226.
A
B
c
Protection of workers' rights and interests-Availability of under the
D
Constitution-Held, not available-Hoivever, on .facts, st~{ficient sqfeguards
anl/ protection are built in various agree111ents entered into with the Strategic
Partner besides availability of protection under existing laws-Constitution of
India, 1950-Articles 12, 14 and 16.
Non-consultation with State Govemment by Union of India regan/ing
E
disenvestment-0.(fer by the State Government to purchase 51% equity at a
higher price-Held, on facts, State Government was not oblivious of the
disinvestment of BALC0-0.[fer not valid since the disinvestment is over.
Disinvestn1ent Co1nn1ission reconunendations to Union of India-Binding nature-Held, not binding.
Valuation o,f a:-;sets to arrive at a reserve price-Correctness thereofHeld, valuation is a question of fact and hence, not an1enable to Judicial
review-On facts, proper procedure has been .followed in valuation.
Disinvestment decision of BALCO-Transparency of-Held, there is
complete transparency-On .fai:ts,fair and equitable procedure was followed in
carrying out disinvestn1ent-Clain1 by the State Government uncharitable and
baseless.
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Trans.fer of land, which was originally a tribal land and given on lease
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SUPREME COURT REPORTS
[2001] SUPP. 5 S.C.R.
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to BALCO, to a non-tribal o;; disinvestment-Validity of-Held, change qf
management or shareholding does not involve tran~fer of land-Allegation
baseless since original tran~fer of land to BALCO WllS not questioned-M.P.
Land Revenue Code, 1959-Mining Concession Rules.
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F
G
H
Ad111inistrtitive Unv:
Principles o,f Natural Justice-Right o.f hearing and consultation with
employees b~fore taking economic policy decisions-Availability of-Held, not
available.
Public Interest Litigation :
Petition Oil Disinevstment decisions-Admissibility of-Grant of Expparte reli~f-Held, not admissible as it is not meant to challenge financial or
economic decisions of the Government-Ex-parte reli4should be granted after
taking undertaking from the Petitioner to indemnify any loss or damage if PIL
is dismissed since any delay will be contrary to public interest.
Mis. Bharat Aluminium Comapny Limited (BALCO) was incorporated in 1965 under the Companies Act, 1956 as a Public Sector Undertaking (PSU). The State Government provided land partly by transfer of its
own land and partly through land acquisition to the undertaking for its
establishment. Since 1990-91, successive Central Governments had been
planning to disinvest some of the PS Us and in 1996, the Union of India
constituted a Disinvestment Commission as an independent non-statutory
advisory body and set out broad terms of reference. In 1997, the Commission recommended the Union of India to privatise BALCO and suggested
disinvestment of 40% of equity holding to a Strategic Partner and dilution
of remaining 60 % holding through public offer over a period of time.
Subsequently, on the basis of the revised recommendations of the Commission, Chairman suggested the Union of India to offer 51 % or more to the
Strategic Partner along with transfer of management. The Union of India
approved the sale of 51 % equity and appointed a Global Advisor through
competitive bidding process to carry out the process cf disinvestment.
This decision was challenged in 1999 by the BALCO Employees
Union by filing a Writ Petition in the High Court of Delhi. The High Court
disposed of the Writ Petition on the basis of a mutual consent that advance
intimation will be given to the employees before taking a final decision on
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BALCO EMPLOYEES UNION (REGD.) v. U.O.l.
513
disinvestment.
In June 2

## Text

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BALCO EMPLOYEES UNION (REGO.)
v.
UNION OF INDIA AND ORS.
DECEMBER 10, 2001
[B.N. KIRPAL, SHIVARAJ V. PATIL AND
P. VENKATARAMA REDD!, JJ.]
Disinvestnzent:
Disinvestment of 51% equity qf Balco, a Public Sector Undertaking, by
Central Govemnient to a Strategic Partner and transfer o,fnranagement thereofAmenability to Judicial Review-Held, it is cm ec~nomic policy decision qf the
Govenunent and hence not tunenable to judicial review-Constitution o,f India,
1950 -Articles 32 & 226.
A
B
c
Protection of workers' rights and interests-Availability of under the
D
Constitution-Held, not available-Hoivever, on .facts, st~{ficient sqfeguards
anl/ protection are built in various agree111ents entered into with the Strategic
Partner besides availability of protection under existing laws-Constitution of
India, 1950-Articles 12, 14 and 16.
Non-consultation with State Govemment by Union of India regan/ing
E
disenvestment-0.(fer by the State Government to purchase 51% equity at a
higher price-Held, on facts, State Government was not oblivious of the
disinvestment of BALC0-0.[fer not valid since the disinvestment is over.
Disinvestn1ent Co1nn1ission reconunendations to Union of India-Binding nature-Held, not binding.
Valuation o,f a:-;sets to arrive at a reserve price-Correctness thereofHeld, valuation is a question of fact and hence, not an1enable to Judicial
review-On facts, proper procedure has been .followed in valuation.
Disinvestment decision of BALCO-Transparency of-Held, there is
complete transparency-On .fai:ts,fair and equitable procedure was followed in
carrying out disinvestn1ent-Clain1 by the State Government uncharitable and
baseless.
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Trans.fer of land, which was originally a tribal land and given on lease
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SUPREME COURT REPORTS
[2001] SUPP. 5 S.C.R.
A
to BALCO, to a non-tribal o;; disinvestment-Validity of-Held, change qf
management or shareholding does not involve tran~fer of land-Allegation
baseless since original tran~fer of land to BALCO WllS not questioned-M.P.
Land Revenue Code, 1959-Mining Concession Rules.
B
c
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F
G
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Ad111inistrtitive Unv:
Principles o,f Natural Justice-Right o.f hearing and consultation with
employees b~fore taking economic policy decisions-Availability of-Held, not
available.
Public Interest Litigation :
Petition Oil Disinevstment decisions-Admissibility of-Grant of Expparte reli~f-Held, not admissible as it is not meant to challenge financial or
economic decisions of the Government-Ex-parte reli4should be granted after
taking undertaking from the Petitioner to indemnify any loss or damage if PIL
is dismissed since any delay will be contrary to public interest.
Mis. Bharat Aluminium Comapny Limited (BALCO) was incorporated in 1965 under the Companies Act, 1956 as a Public Sector Undertaking (PSU). The State Government provided land partly by transfer of its
own land and partly through land acquisition to the undertaking for its
establishment. Since 1990-91, successive Central Governments had been
planning to disinvest some of the PS Us and in 1996, the Union of India
constituted a Disinvestment Commission as an independent non-statutory
advisory body and set out broad terms of reference. In 1997, the Commission recommended the Union of India to privatise BALCO and suggested
disinvestment of 40% of equity holding to a Strategic Partner and dilution
of remaining 60 % holding through public offer over a period of time.
Subsequently, on the basis of the revised recommendations of the Commission, Chairman suggested the Union of India to offer 51 % or more to the
Strategic Partner along with transfer of management. The Union of India
approved the sale of 51 % equity and appointed a Global Advisor through
competitive bidding process to carry out the process cf disinvestment.
This decision was challenged in 1999 by the BALCO Employees
Union by filing a Writ Petition in the High Court of Delhi. The High Court
disposed of the Writ Petition on the basis of a mutual consent that advance
intimation will be given to the employees before taking a final decision on
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BALCO EMPLOYEES UNION (REGD.) v. U.O.l.
513
disinvestment.
In June 2000, the Global Advisor issued global advertisements in
leading journals and newspapers calling for 'Expression of Interest' for
acquiring 51 % equity in BALCO. Eight companies expressed their interest. The Global Advisor, in consultation with the Union of India, shortlisted three companies and requested them to submit their financial bids.
Meanwhile, asset valuation of BALCO was do11e to fix reserve price of
51 % equity through a Valuer independently. the reserve price was fixed at
Rs. 514.40 crores. The highest bid of Rs. 551.50 crores was aceepted by the
Union of India. After passing a resolution in the Lok Sabha, a ShareholdA
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ers Agreement and a Share-Purchase Agreement between Union of India
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and the highest bidder were signed as per the procedure for disinvestment.
A Writ Petition by the Employees' Union was filed in the High Court
of Delhi challenging the disinvestment of BALCO by the Union of India. A
Public Interest Litigation (PIL) was also filed in the same High Court.
Another Writ Petition was filed by an employee in the High Court of
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Chattisgarh. In the meantime, BALCO received notices from the State
Government authorities for alleged breach of various provisions of the
M.P. Land Revenue Code, 1959 and the Mining Concession Rules. BALCO
filed a Writ Petition under Article 32 of the Constitution of India before
this Court. The Writ Petitions filed before the High Courts were transE
ferred to this Court and all the cases were heard together.
Petitioner-Employees Union contended that BALCO is a State under
Article 12 of the Constitution of India and hence by disinvestment of
BALCO, the employees lost their rights and protection under Article 14
and 16 of the Constitution; and that the employees have a right to be heard
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before and during the process of disinvestment.
The State Government, besides supporting the contention of the
Employees Union contended that the implementation of the disinvestment
policy has failed to evoke a comprehensive package of socio-economic and
political reform towards implementation of the policy of disinvestment;
that it was not consulted by the Union of India in the process of disinvestment
and that it was prepared to offer a higher value than the one accepted; that
the Union of India had deviated from the recommendation of the CommisG
sion by disinvesting 51 % of the holding on the basis of a suggestion of the
Chairman of the Commission; that the method of valuation of the assets of
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[2001] SUPP. 5 S.C.R.
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the company was faulty as some assets were not taken into considera.tion
for valuation and that the accepted offer viz., Rs. 551.50 crores did not
represent the correct value of 51 % equity along with controlling interest;
that the whole process of disinvestment lacked transparency; that the
disinvestment decision defeats the provisions of the M.P. Land Revenue
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Code, 1959 and goes against the fundamental basis on which the land was
acquired for the purpose of the company; that the land could not be
transferred to a non-tribal.
Public interest litigant, challenging the disinvestment, contended that
he had been closely connected with PSUs and therefore had the locus standi
to file the Writ Petition.
Respondent-Union of India contended that tllte wisdom and advisability of economic policies of a Government are not amenable to judicial
review; and that the challenge to the decision to disinvest on the ground
that it impairs public interest or that it was without any need to disinvest
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or that it was inconsistent with the decision of the Commission is untenable.
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BALCO submitted that the entire rationale and process of
disinvestment before taking a final decision was explained to the employ·
ees; and that the various representations made by the Employees Union
had been considered before finalising the disinvestment.
Dismissing the petitions, the Court
HELD : I.1. Process of disinvestment is a policy decision involving
complex economic factors. Courts have consistently refrained from interfering with economic decisions as it has been recognised that economic
expediencies lack adjudicative disposition and u"'less the economic decision, based on economic expediencies, is demonstr:ated to be so violative of
constitutional or legal limits on power or so abhorrent to reason, that
Courts would decline to interfere. In matters relating to economic issues,
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the Government has, while taking a decision, right to "trial and error" as
long as both trial and error are bona .fide and within limits of authority.
There is no case made out by the petitioner that the decision to disinvest in
BALCO is in any way capricious, arbitrary, illegal or uninformed.
[547-G-H; 548-A]
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1.2. The policies of the Government ought Mt to remain static. With
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BALCO EMPLOYEES UNION (REGO.) v. U.0.l.
515
the change in economic climate, the wisdom and the manner for the
Government to run commercial ventures may require reconsideration.
What may have been in the public interest at a point of time may no longer
be so. While it was a policy decision to start BALCO as a company owned
by the Government, it is as a change of policy that disinvestment has now
taken place. If the initial decision could not be validly challenged on the
same parity of reasoning, the decision to disinvest also cannot be impugned
without showing that it is against any law or ma/a fide. [551 ·B·CJ
1.3. In a democracy, it is the prerogative of each elected Government
to follow its own policy. Often a change in Government may result in the
shift in focus or change in economic policies. Any such change may result
in adversely affecting some vested interests. Unless any illegality is committed in the execution of the policy or the same is contrary to law or ma/a
fide, a decision bringing about change cannot per se be interfered with by
the Court. [572-F]
1.4. Wisdom and advisability of economic policies are ordinarily not
amenable to judicial review unless it can be demonstrated that the policy is
contrary to any statutory provision or the Constitution. In other words, it
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is not for the Court to consider relative merits of different economic
policies and consider whether a wiser or better one can be evolved. For
testing the correctness of a policy, the appropriate forum is the Parliament
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and not the Court. Here the policy was tested and the Motion defeated in
the Lok Sabha on 1st March, 2001. [572-G-H]
1.5. In the case of a policy decision on economic matters, Courts
should be very circumspect in conducting any enquiry or investigation and
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must be most reluctant to impugn the judgment of the experts who may
have arrived at a conclusion unless the Court is satisfied that there is
illegality in the decision itself. [ 572-G· HJ
Rustom Cavasjee Cooper v. Union of India, [1970] 1 SCC 248 CB,
reWoo.
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Fertilizer Corporation Kamgar Union (Regd.), Sindri and Ors. v. Union
of India and Ors., [1981] 1 SCC 568; State o.f M.P. and Ors. v. Nandlal Jaiswal
& Ors., (1986] 4 SCC 566; G.B. Mahajan and Ors. v. Ja/gaon Municipal
Couμcil and Ors., [1991) 3 SCC 91; Peerless General Finance and Investment
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[200 l] SUPP. 5 S.C.R.
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Co. Ltd. and Anr. v. Reserve Bank of India, [1992] 2 SCC 343; Premium
Granites and Anr. v. State of Tamil Nadu and Ors., [1994] 2 SCC 691; Delhi
Science Forum and Ors. v. Union of India and Anr., [!996] 2 SCC 405; R.K.
Garg v. Union of India and Ors., [1981] 4 SCC 675; M.P. Oil Extraction and
Anr. v. State ~f M.P. and Ors., [1997] 7 SCC 592; State ~f Pun;ab and Ors. v.
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Ram Lubhaya Bagga and Ors., [1998] 4 SCC 117; Bhavesh D. Parish and
Ors. v. Union of India and Anr., [2000] 5 SCC 471 and Nannada Bachao
Ando/an v. Union ~(India and Ors., [2000] 10 SCC 664, referred to.
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2.1. The workers may have interest in the manner in which the
company is conducting its business as the policy decision may have an
impact on the workers' rights, nevertheless it is an incidence of service for
an employee to accept a decision of the employer which has been honestly
taken and which is not contrary to law. Even a govemment servant, having
the protection of not only Articles 14 and 16 of the Constitution but also of
Article 311, has no absolute right to remain in service. Hence, non-govern·
ment employees working in a company which by reason of judicial pro·
nouncement may be regarded as a State for the purpose of Part III of the
Constitution, cannot claim a superior or a better right than a government
servant and impugn its change of status. [548·B·D]
Ajay Hasia and Ors. v. Khalid Mujib Sehravardi and Ors., [1981] 1 SCC
722; Central Inland Willer Transport Corporation Ltd. and Anr. v. Brajo Nath
Ganguly and Anr.. [1986] 3 SCC 156; Bharat Petroleum (Erstwhile Burmah
Shell) Management Stq[f Pensioners v. Bharat Petroleum Corporation Ltd. and
Ors., [1998] 3 SCC 32, referred to.
2.2. The policy of disinvestment cannot be faulted if as a result
thereof the employees lose their rights or protection under Articles 14 and
16 of the Constitution. In other words, the existence of rights of protection
under Articles 14 and 16 of the Constitution cannot possibly have the
effect of vetoing the Government's right to disinvest. The employees can·
not claim a right of continuous consultation at different stages of the
disinvestment process. If the disinvestment process is gone through with·
out contravening any law, the normal consequences as a result of
disinvestment must follow. [548-G-H; 549-A]
State of Haryana v. Shri Des Raj San!(ar and Anr., [1976] 2 SCC 844,
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relied on.
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BALCO EMPLOYEES UNION (REGD.) "· U.0.1.
517
Southern Structural Staff Union v. Managemenl of Southern Structural
Ltd. & Anr., (1994) 81 Comp. Cases 389, approved.
2.3. The Government could have run the industry departmentally or
in any other form. When it chooses to run an industry by forming a
company and it becomes its shareholder then under the provisions of the
Companies Act as a shareholder, it would have a right to transfer its
shares. When persons seek and get employment with such a company
registered under the Companies Act, it must be presumed that they accept
the right of the directors and the shareholders to conduct the affairs of the
company in accordance with law and at the same time they can exercise
the right to sell their shares. As a result of disinvestment of 51 % of the
shares of the company, the management and control, no doubt, has gone
into private hands. Nevertheless, it cannot, in law, be said that the em·
ployer of the workmen has changed. The employees continue to be under
the company and change of management does not in law amount to a
change in employment. [549-B·C]
2.4. The minutes of the meeting held between the Union of India and
BALCO with the petitioner disclose that, in principle, the petitioner was not
against disinvestment but were concerned with their interest being suffi·
cientiy safeguarded. In. the Shareholders Agreement between the Union of
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India and the Strategic Partner, it is provided that there would be no re·
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trenchment of any worker in the first year after the closing date and there·
after restructuring of the labour force, if any, would be implemented in a
manner recommended by the Board of Directors of the company. It further
mandates that in the event of reduction in the strength of its employees is
required, then it is to be ensured that the company offers its employees an
option to voluntarily retire on terms that are not in any manner less favour·
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able than the Voluntary Retirement Scheme offered by the company on the
date of the arrangement. Beside, BALCO undertook before this Court, that
it will not retrench any worker who is in the employment on the date of
takeover of the management by the Strategic Partner, other than any dis·
missal or termination of the worker(s) of the company from their employG
ment in accordance with the applicable staff regulations and standing or·
ders of the company or other applicable laws. [552-E-H; 553-A]
2.5. 'f!te workers' interest are adequately protected in the process of
disinvestment. The existing laws adequately protect workers' interest and
no decision affecting a huge body of workers can be taken without the prior
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SUPREME COURT REPORTS
[200 I] SUPP. 5 S.C.R.
consent of the State Government. Further more, the service conditions are
governed by the certified order of the company and any change in the conditions thereto can only be made in accordance with law. It is clear from the
facts that safeguarding the interest of the workers was one of the concerns
of the Government. Representations had been received from the Trade Union
leaders and effort was macje to try and ensure that the process of disinvestment
did not adversely affect the workers. [553-B; 556-B]
2.6. It will not be open to a Court to consider whether there has been
a gross failure to evolve comprehensive package towards implementation
of the policy on disinvestment. In the process of disinvestment, it is evident
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that the Union of India was aware of the interest of the workers and
employees as a class. It was precisely for this reason that safeguards were
inserted in the Shareholders Agreement. These terms were incorporated in
the agreement after the demands of BALCO employees were considered
by the Union of India. (558-A; B]
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3.1. In taking policy decision in economic matters at length, principles of natural justice have no role to play. While it is expected of a
responsible employer to take all aspects into consideration including welfare of the labour before taking any policy decision that, by itself, will not
entitle the employees to demand a right of hearing or consultation prior to
the taking of the decision. [548-D-E]
3.2. Merely because the workmen may have protection of Articles 14
and 16 of the Constitution, °by regarding BALCO as a State, it does not
mean that the erstwhile sole. shareholder viz., Government had to give the
workers prior notice of hearing before deciding to disinvest. There is no
principle of natural justice which requires prior notice and hearing to
persons who are generally affected as a class by an economic policy decision of the Government. However, it is the case of the Union of India that
the workers had been fully informed about the process of disinvestment
through an ongoing dialogue. [548-F]
3.3. Employees of the company may have an interest in seeing as to
how the company is managed, bnt it is unacceptable that in the process of
disinvestment, the principles of natural justice would be applicable and
that the workers, or for that matter any other party having an interest
therein, would have a right of being heard. For good goveranance and
BALCO EMPLOYEES UNION (REGD.) v. U.0.1.
519
administration whenever such policy decisions are taken, it is desirable
that there shonld be wide range of consnltations including considering any
representations which may have been filed, but there is no provision in law
which would require a hearing to be granted before taking a policy decision. In exercise of executive powers, policy decisions have to be taken
from time to time. It will be impossible and impracticable to give a formal
hearing to those who may be affected whenever a policy decision is taken.
One of the objects of giving a hearing in application of the principles of
natural justice is to see that illegal action or decision does not take place.
Auy wrong order may adversely affect a person and it is esssentially for
this reason that a reasonable opportunity may have to be granted before
passing of an administrative order. In case of the policy decision, however,
it is impracticable, and at times against the public interest, to do so, but
this does not mea.n that a policy decision which is contrary to law cannot be
challenged. Not giving the workmen an opportunity of being heard cannot
per se be a ground of vitiating the decision. If the decision is otherwise
illegal as being contrary to law or anyConstitutional provision, the persons
affected like the workmen, can impugn the same, bot not giving a pre
decisional hearing cannot be a ground for quashing the decision. [556-C-F]
3.4. In judicial proceedings where rights are likely to be affected, principles of natural justice would require the Court to give a hearing to the
party against whom an adverse or unfavourable order may be passed. No
judicial or quasi-judicial functions are exercised by the Government when it
decides, as a matter of policy, to disinvest shares in a Public Section Undertaking. While it may be fair and sensible to consult the workers in a situation
of change of management, there is, however, in law no such obligation to
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consult in the process of sale of majority shares in company.(557-B-D]
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National Textile Workers' Union and Ors. v. P.R. Ramakrishnan, (1983]
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1 sec 228, distinguished.
Pm.f. Babu Mathew and Ors. v. Union of India and Ors., (1997] 90
Company Cases 455, approved.
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4. The grievance of alleged non-consultation of the State Government in the process of disinvestment of BALCO is a matter between the
State Government and the Union of India and such grievance cannot be
raised by the State against the Union of India in the proceedings initiated
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SUPREME COURT REPORTS
[2001] SUPP. 5 S.C.R.
by the workmen before the Court. However, it is unbelievable that during
the entire process of disinvestment of BALCO, the State Government was
oblivious of what was happening.· Wide publicity was given at various
stages in connection with the disinvestment. It was after doe pnblicity a
Global Adviser was appointed and thereafter advertisement was issued in
an effort to select the Strategic Partner. The whole process of disinvestment
of BALCO took place over a period of about two years. The issue was even
debated by members in the Lok Sabha. There wa~ nothing to prevent the
State Government at any stage prior to the selection of the Strategic
Partner, either to forward its views or a representation or even to make an
offer of buying the 51 % of the shares which were being sold. Once
Sharesholders' Agreement has been signed, the offer of the State Government to buy 51 % equity shares in the company for a higher value of
Rs. 551.41 crores would be of no ronsequence. This offer did not see the
light of the day till the start of the litigation. [558-D-GJ
5. The Chairman of the Commission requested the Government to
consider strategic sale of 51 % or more of the equity instead of the recommendation of the Commission for sale of only 40 % of the equity. From the
facts, it is not possible to accept the contention that the Union of India
deviated from the advise given by the Disinvestment Commission. The
advice of the Commission was not binding on the Union of India. Further,
the terms of reference and the provisions contained in the Resoloution
which required the disinvestment under the supervision of the Commission
and the Commission advising the Government on matters like consideration of the interests of the stake-holders, workers, consumers etc., were
deleted by the subsequent Resolution. The Commission became only an
advisory or recommendatory body. The acceptance of the advice by the
Government and corning to the conclusion that sale of 51 % or more of the
equity of BALCO along with transfer of management would secure a
better price than the sale of only 40% cannot be regarded as unwarranted,
illegal or arbitrary. [559-G-H; 560-A-C]
6.1. It is not for this Court to consider whether the reserve price
fixed by the Valuer at Rs. 514.5 crores was correct or not. What has
to be seen in exercise of judicial review of administrative action is to
examine whether proper procedure has been followed and whether the
reserve price which was fixed is arbitrarily low and on the face of it,
unacceptable. [ 560-F]
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BALCO EMPLOYEES UNION (REGD.) v. U.0.1.
521
6.2. Assets including shares can be sold in a number of ways, i.e., by
public auction, tenders or sealed offers or by negotiations. The exercise which
was undertaken to appoint a Valuer and to get a value of this controlling
interest of 51 % of the shares was presumably to arrive at the reserve price.
What the assets will fetch, is ultimately reflected in the offer which is
received. The bidders at the time offurnishing their bids did not know what
will be the reserve price which had to be fixed. It is only after the receipt of
the bids that the reserve price was made known. The perception in the market, therefore, clearly was that 51 % shares of BALCO along with its management was not worth more than Rs. 550.5 crores. Under the circumstances,
when the Union of India had decided to disinvest in BALCO by acepting a
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bid far in excess of the reserve price which was fixed by the Valuer, the said
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decision cannot, under any circumstances, be faulted. Whether the reserve
price should have been 514.4 crores or more appears to be immaterial when
the best price which has been offered for the sale of 51 % stake in BALCO
after global advertisement was only Rs. 551.5 crores. There is no suggestion
that there was any other company or Institution which had or could offer
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more than the said sum. When proper procedure has been followed and an
offer Is made of a price more than the reserve price then there is no basis for
this Court to conclude that the decision of the Government to accept the
highest offer is in any way vitiated. [560-G-H; 561-A-E]
6.3. The offer of the highest bidder was more than the reserve price
which was arrived at by a method which is well recognised. Further,
valuation is a question of fact and Court will not interfere in matters uf
valuation unless the methodology adopted is arbitrary. [573-C]
Duncans lndusrtries Ltd. v. State of U.P. and Ors., [2000] I SCC 633,
relied on.
7 .1. Transparency does not mean the conducting of Government business while sitting on the cross roads in public. Transparency would require
that the manner in which decision is taken is made known. Persons who are
E
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to decide are not arbitrarily selected or appointed:The selection of the GloG
bal Adviser and the Strategic Partner was through the process of issuance of
global advertisement. It is the Global Adviser who selected the Valuer who
was already on the list of valuers maintained by the Government. Whatever
material was received was examined by a High Power Committee and the
ultimate d~cision was taken by the Cabinet Committee on Disinvestment. To
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SUPREME COURT REPORTS
[2001] SUPP. 5 S.C.R.
A
say that there has been lack of transparency, under these circumstances, is
uncharitable and without any basis. [561-G-H; 562-A]
B
c
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7.2. The facts show that fair, just and equitable procedure has been
followed in carrying out this disinvestment. The allegations of lack of
transparency or that the decision was taken in a hurry or there has been an
arbitrary exercise of power are without any basis. It is a matter of regret
that the State Government has been making such allegations against the
Union of India without any basis. This Court strongly deprecates snch
unfounded averments made by an officer of the State. [573-A-B]
8. The giving of land to BALCO on lease was clearly permissible
under the provisions of the M.P. Land Revenue Code, 1959 as it stood then.
It is too late after 25 years when the last permission was granted to hold
that becaues of the disinvestment, it must be presumed that there is a
transfer of land to the non-tribal in the year 2001 even though the land
continues to reamin with BALCO to whom it was originally transferred.
The change of management or in the shareholding does ot imply that there
is transfer of land from one company to another. If the original grant of
lease of land and permission to transfer in favour of BALCO between the
years 1968 and 1972 was valid, then, it cannot now be contended that there
has been another transfer of land with the Government having reduced its
stake to 49%. Even if BALCO had been a non-public sector undertaking,
the transfer of land to it was not in violation of the Land Revenue Code.
The land was validly given to BALCO a number of years ago and today it
is not open to tM State Government to take a summersault and challenge
the correctness of its own action. Furthermore even with the change in
management the land remaius with BALCO to whom it had been validly
given on lease. [564-E-H]
Samatha v. State ()f A.P. and Ors., [1997] 8 SCC 191, distinguished.
9.1. Public Interest Litigation (PIL) is not a pill or a panacea for all
wrongs. It was essentially meant to protect basic human rights of the weak
and the disadvantaged and was a procedure which was innovated where a
public spirited person files a petition in effect 011 behalf of such persons
who on account of poverty, helplessness or economic and social disabilities
could not approach the Court for relief. There have been, in recent times,
increasing instances of abuse of PIL. [566-F]
'
BALCO EMPLOYEES UNION (REGD.) v. U.0.1.
523
9.2. PIL was not meant to be a weapon to challenge the financial or
economic decisions which are taken by the Government in exercise of their
administrative power. A person personally aggrieved hy any such decisii;n,
which he regards as illegal, can impugn the same in a Court of law, but, a
PIL at the behest of a stranger ought not to be entertained. Such a litiga·
tion cannot perse be on behalf of the poor and the downtrodden, unless the
Court is satisfied that there has been violation of Article 21 and the
persons adversely affected are unable to approach the Court. The decision
to disinvest and the implementation thereof is purely an administrative
decision relating to the economic policy of the State and challenge to the
same at the instance of a busy-body cannot fall within the parameters of
PIL. [571-G-H; 572-A]
9.3. Judicial interference by way of PIL is available if there is injury to
public because of dereliction of Constitutional or statutory obligations on
the part of the government. Here it is not so and in the sphere of economic
policy or reform the Court is not the appropriate forum. Every matter in
public interest or curiosity cannot be the subject matter of PIL.'Courts are
not intended to and nor should they conduct the administration of the country. Courts will interfere only if there is a clear violation of Constitutional or
statutory provisions or non-compliance by the State with its Constitutional
or statutory duties which is not so in the present case. [573-E-G]
9.4. No ex-parte relief by way of injunction or stay especially with
respect to public projects and schemes or economic policies or schemes
should be granted. It is only when the Conrt is satisfied for good and valid
reasons, that there will be irreparable and irretrievable damage an injunction should be issued after hearing all the parties. Even then the Petitioner
should be put on appropriate terms such as providing an indemnity or an
adequate undertaking to make good the loss or damage in the event the
PIL filed is dismissed. It is in public interest that there should be early
disposal of cases. PIL should, therefore, be disposed of at the earliest as
any delay will be contrary to public interest and thus become counterproductive. [574-A-C]
A
B
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F
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S.P. Gupta v. Union qf India and Anr., [1981] Supp. SCC 87; Sachidanand
Pandey and Anr. v. State of West Bengal and Ors., [1987] 2 SCC 295; Subhash
Kumar v. State qf Bihar and Ors., [1991] 1 SCC 598; Janata Dal v. H.S.
Chowdhary and Ors., [1992] 4 SCC 305; Raunaq International Ltd. v. I. V.R.
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SUPREME COURT REPORTS
[200 I] SUPP. 5 S.C.R.
A
Construction Ltd. and Ors., [1999] l SCC 492 and Narmada Bachao Ando/an
v. Union of India and Ors., [2000] 10 SCC 664, referred to.
B
10. With regard to the .writ petition filed nnder Article 32 of the
Constitntion by BALCO challenging various show canse notices issned by
the State Government anthorities for alleged breach of varions provisious
of Land Revenne Code and Mining Concession Rules, the company has
adequate alternative remedy under the enactments under which the notices had b~en issued and, in appropriate case, can approach the High
Court under Article 226 of the Constitution. [572-D]
C
CIVIL ORIGINAL JURISDICTION : Transferred Case (C) No. 8 of
D
2001.
WITH
T.C. (C) Nos. 9 and IO of 2001 and W.P. (C) No. 194 of 2001.
Soli J. Sorabjee, Attorney General, Harish N. Salve, Solicitor General,
Dipankar P. Gupta, G.L. Sanghi, C.A. Sunc'!farn, P. Chidambararn, Anoop G.
Chaudhary, Ranjit Kumar, Dr. A.M. Singhvi, Jaideep Gupta, Sanjay Sen, Rana
S. Biswas, Ms. Sheetal Sharma, Sitesh Mukherjee, Ms. Indra Sawhney, S.S.
Ray, Ms. Rakhi Ray, Ms. P.S. Shroff, Ms. Ritu Bhalla, Sidharth Datta, Manish
E
Singhvi, Ankur Talwar, Maninder Singh, Ms. Pratibha M. Singh, Ms. Kavita
Wadia, Siddharth Goswami, Siddharth Chowdhury, B. V. Bairam Das, Rajiv K.
Garg, Annam D.N. Rao, Ravindra Shrivastava, Ad vs. General for Chhattisgarh,
Prakash Shrivastava, Piyush Dharmadhikari, Ms. Suparna Shrivastava, Harsh
Verma, R.M. Sharma, San jay Parikh, R.R. Chandrachud, Arun Beriwal, Sudhir
F
Walia, Mahinder Singh Dahiya, Jaideep Gupta, Shahid Rizvi and Ms. Sarla
Chandra for the appearing parties.
G
In-person for the Petitioner in T.C. (C) No. 9/2001.
The Judgment of the Court was delivered by
KIRPAL, J. The validity of the decision of the Union of India to
disinvest and transfer 51 % shares of M/s Bharat Aluminium Company Limited
(hereinafter referred to as 'BALCO') is the primary issue in these cases.
BALCO was incorporated in 1965 as a Government of India UndertakH
ing under the Companies Act, 1956. Prior to its disinvestment it had a paid-
,
BALCO EMPLOYEES UNION (REGO.) v. U.0.1. [KIRPAL, J.]
525
up share capital of Rs. 488.85 crores which was owned and controlled by the
A
Government of India. The company is engaged in the manufacture of aluminium and had plants at Korba in the State of Chhattisgarh and Bidhanbag
in the State of West Bengal. The Company has integrated aluminium manufacturing plant for the manufacture and sale of aluminium metal including wire
rods and semi-fabricated products.
B
The Government of Madhya Pradesh vide its letter dated 18th March,
1968 wrote to BALCO stating that it proposed that land be granted to it on a
99 years lease subject to the terms and conditions contained therein. The letter
envisaged giving on lease Government land on payment of premium of Rs. 200
per acre and, in addifon thereto also to provide tenure land which was to be
acquired and transferred on lease to BALCO on payment by it the actual cost
of acquisition plus annual lease rent. Vide its letter dated 13th June, 1968
BALCO gave its assent to the proposal contained in the aforesaid letter of 18th
March, 1968 for transfer of land to it. BALCO intimated by this letter that the
c
total requirement of land would be about 1616 acres. Thereafter, in addition
D
to the Government land which was transferred, the Government of Madhya
Pradesh acquired land for BALCO under the provisions of the Land Acquisition Act, 1894 on payment of compensation. The District Collector, Bilaspur
also granted permission under Section 165(6) of the M.P. Land Revenue Code,
1959 for acquiring/transferring private land in favour of BALCO. As a result
E
of the aforesaid, BALCO set up it's establishment on it's acquiring land from
and with the help of the State Government.
Since 1990-91 successive Central Governments had been planning to
disinvest some of the Public Sector Undertakings. In pursuance to the policy
of disinvestment by a Resolution dated 23rd August, 1996 the Ministry of
Industry (Department of Public Enterprises) Government of India constituted
a Public Sector Dis-investment Commission initially for a period of three years.
The Resolution stated that this Commission was established in pursuance of the
Common Minimum Programme of the United Front Government at the Centre.
F
The Commission was an independent, non-statutory advisory body and was
G
headed by Shri G. V. Ramakrishna who was to be its Full-time Chairman. The
Commission had four p]llt-time Members. Paras 3, 4 and 5 of the said ResoJution are as follows:-
"3. The broad terms of reference of the Commission are as follows:-
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526
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I.
SUPREME COURT REPORTS
[2001] SUPP. 5 S.C.R.
To draw a comprehensive overall long term disinvestment programme within 5-10 years for the PSUs referred to it by the Core
Group.
II.
To determine the extent of disinvestment (total/partial indicating
percentage) in each of the PSU.
III.
To prioritise the PSUs referred to it by the Core Group in terms
of the overall disinvestment programme.
IV.
v.
To recommend the preferred mode(s) of disinvestment (domestic
capital markets/international capital markets/auction/private sale
to identified investors/any other) for each of the identified PS Us.
Also to suggest an appropriate mix of the various alternatives
taking into account the market conditions.
To recommend a mix between primary and secondary
disinvestments taking into account Government's objective, the
relevant PSUs funding requirement and the market conditions.
VI.
To supervise the overall sale process and take decisions on
instrument, pricing, timing, etc. as appropriate.
VIL To select the financial advisers for the specified PSUs to facilitate
the disinvestment process.
VIII. To ensure that appropriate measures are taken during the
disinvestment process to protect the interests of the affected
employees including encouraging employees' participation in
the sale process.
IX.
To monitor the progress of disinvestment process and take necessary measures and report periodically to the Government on
such progress.
X.
To assist the Government to create public awareness of the
Government's disinvestment policies and programmes with a
vi~w to developing a commitment by the people.
XL
To give wjde publicity to the disinvestment proposals so as to
ensure larger public participation in the shareholding of the
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enterprises; and
BALCO EMPLOYEES UNION (REGD.) v. U.0.1. [KIRPAL, J.]
527
XII. To advise the Government on possible capital restructuring of
A
enterprises by marginal investments, if required, so as to ensure
enhanced realisation through disinvestment.
4.The Disinvestment Commission will be advisory· body and the
Government will take a final decision on the companies to bedisinveste<l
and mode of disinvestment on the basis of advice given by the
Disinvestment Commission.