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The Central Government on Friday informed the Supreme Court that First Information Reports have been registered in view of the direction of the Court over alleged illegalities in the disinvestment of 26% shares of Hindustan Zinc Limited (HZL) by the Union Government in March 2002. Earlier, the Top Court had directed the Central Bureau of Investigation (CBI) to register the case.

Taking note of Center's submission, the bench of Justice DY Chandrachud and Justice Hima Kohli posted the matter after vacation for further hearing.

The development has taken place in a Public Interest Litigation (PIL) alleging illegalities in the disinvestment to bestow benefits to a few by undervaluing the shares. The petitioners have demanded a CBI probe into the deal. They had also sought Court's direction to restrain the government from further divesting HZL's share. 

Earlier, the Court had allowed further disinvestment, stating that the Union of India may disinvest its residual shareholding of 29.5% in Hindustan Zinc Limited (HZL).

The Bench comprising Justice D Y Chandrachud and Justice B V Nagarathna had then directed the CBI to register a regular case as regards the illegalities. Stressing that a full-fledged investigation must be conducted in the matter, the Court had also asked the CBI to send periodical reports of the investigation to the Court every quarter or as otherwise directed.

In furtherance of this, Solicitor General Tushar Mehta today informed the bench that the FIRs have been registered.

Earlier, the Court in its judgment had said that the union government, as it is in its capacity as a shareholder of HZL, has the right to take certain decisions to disinvest its shareholding so long as the process of disinvestment is transparent and the union government is following a process that comparts with the law and results in the best price being realized.

Court had further noted that during the course of hearing in the instant matter, it had come to light that the shareholding of Sterlite Opportunities and Ventures Limited (SOVL) in HZL has increased to 62.9% after the first call option in 2002 and it does not seek to exercise a second call option in view of the share purchase agreement, and in this backdrop, the union government has taken the decision to sell its shares in the open market.

Court had also clarified that though the union government is a shareholder of HZL, its control and management do not vest with the union government.

Matter in Brief

The Central Government in 2002 decided to divest its controlling shares to Hindustan Zinc Ltd. In 2014. Thereafter, a PIL was filed by an association of officers related to the PSU firm alleging illegalities in the disinvestment.

Advocate Prashant Bhushan had appeared in the case on behalf of the petitioners. According to the petitioners, HZL is not a loss incurring unit and the disinvestment does not sub-serve public interest. 

They had alleged that as the Parliament had acquired the undertaking by the Metal Corporation (Nationalisation and Miscellaneous) Provisions Act 1976 and in pursuance of its acquisition, the undertaking came to be vested in a government company, which is a 'mini-navratna' company with a cash liquidity resource of over Rs 20,000 crores.

Cause Title: National Confederation of Officers Association of Central Public Sector Enterprise & Ors v. Union of India & Ors