Decision of the Union of India Essay

The cogency of the determination of the Union of India to divest and reassign 51 % portions of M/s. Bharat Aluminium Company Limited ( hereinafter referred to as ‘BALCO’ ) is the primary issue in these instances. BALCO was incorporated in 1965 as a Government of India Undertaking under the Companies Act. 1956. Prior to its disinvestment it had a paid-up portion capital of Rs. 488. 85 crores which was owned and controlled by the Government of India. The company is engaged in the industry of aluminum and had workss at Korba in the State of Chhattisgarh and Bidhanbag in the State of West Bengal. The Company has integrated aluminium fabrication works for the industry and sale of aluminum metal including wire rods and semi- fancied merchandises.

The Government of Madhya Pradesh vide its missive dated 18th March. 1968 wrote to BALCO saying that it proposed that land be granted to it on a 99 old ages lease capable to the footings and conditions contained in this. The missive envisaged giving on lease Government land on payment of premium of Rs. 200/- per acre and. in add-on thereto besides to supply term of office land which was to be acquired and transferred on rental to BALCO on payment by it the existent cost of acquisition plus one-year rental rent. Vide its missive dated 13th June. 1968 BALCO gave its acquiescence to the proposal contained in the aforementioned missive of 18th March. 1968 for transportation of land to it.

BALCO intimated by this missive that the entire demand of land would be about 1616 estates. Thereafter. in add-on to the Government land which was transferred. the Government of Madhya Pradesh acquired land for BALCO under the commissariats of the Land Acquisition Act. 1894 on payment of compensation. The District Collector. Bilaspur besides granted permission under Section 165 ( 6 ) of the M. P. Land Revenue Code. 1959 for acquiring/transferring private land in favor of BALCO. As a consequence of the aforesaid. BALCO set up it’s constitution on it’s geting land from and with the aid of the State Government.

Since 1990-91 consecutive Cardinal Government had been be aftering to divest some of the Public Sector Undertakings. In pursuit 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 Disinvestment Commission ab initio for a period of three old ages. The Resolution stated that this Commission was established in pursuit of the Common Minimum Programme of the United Front Government at the Centre. The Commission was an independent. non-statutory consultative organic structure and was headed by Shri G. V. Ramakrishna who was to be its Full-time Chairman. The Commission had four parttime Members. Paras 3. 4 and 5 of the said Resolution are as follows: –

“3. The wide footings of mention of the Commission are as follows: I. To pull a comprehensive overall long term disinvestment programme within 5-10 old ages for the PSUs referred to it by the Core Group. II. To find the extent of disinvestment ( total/partial indicating per centum ) in each of the PSU. III. To prioritize the PSUs referred to it by the Core Group in footings of the overall disinvestment programme. IV. To urge the preferable manner ( s ) of disinvestment ( domestic capital markets/international capital markets/auction/private sale to identified investors/any other ) for each of the identified PSUs. Besides to propose an appropriate mix of the assorted options taking into history the market conditions. V. To urge a mix between primary and secondary disinvestments taking into history Government’s aim. the relevant PSUs support demand and the market conditions. VI. To oversee the overall sale procedure and take determinations on instrument. pricing. timing. etc. as appropriate.

VII. To choose the fiscal advisers for the specified PSUs to ease the disinvestment procedure. VIII. To guarantee that appropriate steps are taken during the disinvestment procedure to protect the involvements of the affected employees including promoting employees’ engagement in the sale procedure. IX. To supervise the advancement of disinvestment procedure and take necessary steps and study sporadically to the Government on such advancement. Ten. To help the Government to make public consciousness of the Government’s disinvestment policies and programmes with a position to developing a committedness by the people.

Eleven. To give broad promotion to the disinvestment proposals so as to guarantee larger public engagement in the shareholding of the endeavors ; and XII. To rede the Government on possible capital restructuring of the endeavors by fringy investing. if required. so as to guarantee enhanced realization through disinvestment. 4. The Disinvestment Commission will be consultative organic structure and the Government will take a concluding determination on the companies to be disinvested and manner of disinvestment on the footing of advice given by the Disinvestment Commission. The PSUs would implement the determination of the Government under the overall supervising of the Disinvestment Commission. 5. The Commission while reding the Government on the above affairs will besides take into consideration the involvements of stakeholders. workers. consumers and others holding a interest in the relevant public sector projects. ”

It may here be noted that by a Resolution dated 12th January. 1998 the earlier Resolution of 23rd August. 1996 was partially modified with omission of paras 3. 4 and 5 and by permutation of the same by the followers: “3 ( I ) The Disinvestment Commission shall be an consultative organic structure and its function and map would be to rede the Government on Disinvestment in those public sector units that are referred to it by the Government. 3 ( two ) The Commission shall besides rede the Government on any other affair associating to disinvestment as may be specifically referred to it by the Government. and besides carry out any other activities associating to disinvestment as may be assigned to it by the Government. 3 ( three ) In doing its recommendations. the Commission will besides take into consideration the involvements of workers. employees and others interest holders. in the public sector unit ( s ) .

3 ( four ) The concluding determination on the recommendations of the Disinvestment Commission will enthrone with the Government. ” Harmonizing to the Union of India. it laid down the wide processs to be followed for treating the recommendations of the Disinvestment Commission. It was. inter alia. decided that: I. The Ministry of Finance ( now Department of Disinvestment ) would treat the recommendations of the Disinvestment Commission. by ask foring remarks from the concerned administrative machinery ; two. Submit the recommendations to the Core Group of Secretaries for Disinvestment for consideration ; three. The recommendations of the Core Group of Secretaries would so be taken to Cabinet for determination ;

four. It was besides decided that the Core Group of Secretaries would be headed by the Cabinet Secretary and its lasting members would be Finance Secretary. Revenue Secretary. Expenditure Secretary. Secretary Department of Public Enterprises. Secretary Planning Commission and Chief Economic Advisor. Ministry of Finance. and v. To implement the determinations. an Inter-Ministerial Group headed by the Secretary/Joint Secretary of the Administrative Ministry and dwelling of Joint Secretaries of Department of Economic Affairs. Department of Public Enterprises. alongwith the Chairman and Managing Director of the Companies as Members and Director ( Finance ) of the company as the Convenor. In instance of BALCO. the IMG consisted of Secretary degree Military officers and was headed by Secretary ( Mines ) .

On 10th December. 1999 the Department of Disinvestment was set up and the duties which were earlier assigned to the Ministry of Finance have now been transferred to this Department. The Disinvestment Commission in its 2nd Report submitted in April. 1997 advised the Government of India that BALCO needed to be privatised. The recommendation which it made was that the Government may instantly divest its retention in the Company by offering a important portion of 40 % of the equity to a strategic spouse. The Report further advised that there should be an understanding with the selected strategic spouse stipulating that the Government would within two old ages make a populace offer in the domestic market for farther sale of portions to establishments. little investors and employees thereby conveying down its keeping to 26 % .

The Commission besides recommended that there should be an ongoing reappraisal of the state of affairs and the Government may divest its balance equity of 26 % in full in favor of investors in the domestic market at the appropriate clip. The Commission had recommended the assignment of a Financial Advisor to set about a proper rating of the company and to carry on the sale procedure. The Commission had categorised BALCO as a non-core group industry. The Chairman of the Disinvestment Commission wrote a missive dated 12th June. 1998 to the Secretary. Ministry of Mines. Government on India pulling the Government’s attending to the recommendation of the Commission for sale of 40 % of equity in BALCO and to conveying down of the Government keeping to 26 % within two old ages.

This missive so referred to the fifth Report of the Commission wherein it had reviewed the inquiry of strategic sale and had suggested that the Government may maintain its shareholding below the degree of investing being offered by the strategic purchaser and its depriving some part of equity to other entities. This missive noted that in these fortunes. it may be hard to acquire in a many-sided fiscal establishment to move fast in taking up portion of BALCO. The Chairman of the Commission so recommended that “in maintaining with the spirit of the recommendations of the fifth Report. you may now kindly see offering 51 % or more to the strategic purchaser along with transportation of direction. This sale will enable a smooth dealing with the engagement of more bidders and better monetary value for the portions. This will besides be in maintaining with the current policy as announced by the FM in his recent budget speech” .

The Cabinet Committee on Economic Affairs had. in the interim. in September 1997 granted blessing for assignment of a proficient and fiscal adviser. selected through a competitory procedure. for pull offing the strategic sale and restructuring of BALCO. Global advertizement was so issued ask foring from interested parties Expression of Interest for choice as a Global Advisor. The advertizement was published in four fiscal documents in India and besides in ‘The Economist’ . a celebrated fiscal magazine published abroad. Eight Merchant Banks showed their involvement in assignment of the Global Advisor. The lowest command of M/s. Jardine Fleming Securities India Ltd. was accepted and approved by the Cabinet Committee on Disinvestment on 9th March. 1999.

The Cabinet Committee on Disinvestment besides approved the proposal of strategic sale of 51 % equity in regard of BALCO. The determination of the Government to the aforesaid strategic sale was challenged by the BALCO Employees’ Union by registering Writ Petition No. 2249 of 1999 in the High Court of Delhi. This request was disposed of by the High Court vide its order dated 3rd August. 1999. On 3rd March. 2000. the Union Cabinet approved the Ministry of Mines’ proposal to cut down the portion capital of BALCO from Rs. 488. 8 crores to Rs. 244. 4 crores. This resulted in hard currency flow of Rs. 244. 4 crores to the Union Government in the Fiscal Year 1999-2000.

A formal Agreement between Jardine Fleming. the Global Advisor and the Government of India was executed on 14th June. 2000. The Scope of work of the Global Advisor. inter alia. included the development. updating and reappraisal of a list of possible purchasers of the interest ; fixing necessary paperss ; helping the Government of India in sale dialogues with possible purchasers and to rede on the sale monetary value ; to organize and supervise the advancement of the dealing until its completion.

Thereafter. on 16th June. 2000 the Global Advisor. on behalf of the Government of India. issued an advertizement naming for “Expression of Interest” in taking diaries and newspapers such as the Economist. London. the Mining Journal. London. the Economic Times. India. Business Standard. India and the Financial Express. India. The invitation was to Companies and Joint Ventures which may be interested in geting 51 % portions of the Government of India in BALCO. The last day of the month for subjecting the look of involvement was 30th June. 2000 and the interested companies were required to subject their look of involvement together with their Audited Annual Reports and a profile depicting their concern and operations.

Eight companies submitted their Expression of Interest. These companies were as follows:

“i. Sterlite Industries ( India ) Ltd.
two. Hindalco Industries Ltd.
three. Tranex Holding Inc.

four. Indian Minerals Corporation Plc.
v. VAW Aluminium AG. Germany
seven. Sibirsky. Soviet union
eight. MALCO”

M/s. Jardine Fleming. Global Advisor made an analysis of the assorted commands on the footing of the fiscal and proficient capableness. acquaintance with India and overall credibleness. Thereupon two companies. viz. . Indian Minerals Corporation Plc. and Tranex Holding Inc. were rejected. The Inter-Ministerial Group ( hereafter referred to as IMG ) set up by the Union of India. accepted the look of involvement of six out of eight parties and it besides decided that the commands of Sterlite and MALCO be treated as one. Thus at that place remained five prospective bidders but two. viz. . VAW Aluminium AG. Germany and Sibirsky. Russia dropped out and the staying three. viz. . ALCOA. USA Hindalco and Sterlite conducted due diligence ( review ) on BALCO between September to December. 2000. The IMG considered the bill of exchanges of the Shareholders’ Agreement and the Share Purchase Agreement and had treatments with three prospective bidders and finally the said bill of exchanges were finalised on 11th January. 2001.

For the intent of transporting out the plus rating of BALCO. the Global Advisor shortlisted four parties from the list of Registered Government Valuers approved by the Income-Tax Department. On 18th January. 2001. BALCO invited citations from the four Registered Valuers. so short listed. and the citation of Shri P. V. Rao was accepted. Shri P. V. Rao was a registered valuer of immoveable belongings and his squad couples were Government Registered Valuers authorised to value works and machinery. They were assisted in the work of rating by officers of the Indian Bureau of Mines for measuring the values of bing mines.

Pending the reception of the rating study from Shri P. V. Rao. the Global Advisor on 8th February. 2001 requested the three bidders to subject their fiscal commands alongwith other necessary paperss by 15th February. 2001. which was later extended by one twenty-four hours. On 14th February. 2001 Shri P. V. Rao submitted his plus rating study to M/s. Jardine Fleming. On 15th February. 2001. an Evaluation Committee headed by the Additional Secretary ( Mines ) was constituted. This Committee was required to repair the modesty monetary value of 51 % equity of BALCO which was to be sold to the strategic party. The three rivals. viz. . Alcoa. Hindalco and Sterlite Industries Ltd. submitted their certain commands to the Secretary ( Mines ) and Secretary ( Disinvestment ) on 16th February. 2001. It is thenceforth. that M/s. Jardine Fleming presented its rating study together with the plus rating done by Shri P. V. Rao to the Evaluation Committee to work out the modesty monetary value.

The scope of rating of BALCO that emerged on assorted methodological analysiss was as follows: –
( I ) Discounted Cash Flow – Rs. 651. 2 – 994. 7 crores
( two ) Comparables – Rs. 587 – 909 nucleuss
( three ) Balance Sheet – Rs. 597. 2 – 681. 9 crores

Therefore. the scope of rating by all these methods came between Rs. 587 and Rs. 995 crores for 100 % of the equity. Ipso facto. for 51 % of the equity. the scope of rating came out as Rs. 300 to Rs. 507 crores. The Evaluation Committee so deliberated on the assorted methodological analysiss and concluded. as per the affidavit of the Union of India. that the most appropriate methodological analysis for valuing the portions of a running concern of BALCO would be the Discounted Cash Flow method. It decided to add a control premium of 25 % on the base value of equity ( although the Advisor had viewed that the premium should run between 10-15 % ) and so add the value of non-core assets to get at a rating of Rs. 1008. 6 crores for the company as a whole. 51 % of which sums of Rs. 514. 4 crores which was fixed as the Reserve Price.

Harmonizing to the respondents. the Evaluation Committee felt that Asset Valuation Report appeared to hold over valued the fixed assets of the company at Rs. 1072. 2 crores. The commission further observed that the fixed plus rating method was merely a good index of the value that could be realised if the concern was to be liquidated. instead than for valuing the concern as a traveling concern. Furthermore. the plus rating method did non take into history the liabilities and contingent liability that go with the concern.

When the fiscal commands were opened. it was found that the command of Sterlite Industries was the highest at Rs. 551. 5 crores. the command of Hindalco was Rs. 275 crores while ALCOA had opted out. The study of the Evaluation Committee for credence of the command which was higher than the modesty monetary value was considered by the IMG which recommended the credence of the command of Sterlite Industries to the nucleus group of Secretaries. This nucleus group in bend made its recommendation to the Cabinet Committee on Disinvestment which on 21st February. 2001 approved/accepted the command of Sterlite Industries at Rs. 551. 5 crores. The Government’s determination was communicated to Sterlite Industries on that day of the month.

The proclamation of the determination to accept the command of Sterlite Industries led to the induction of legal proceedings disputing the said determination. On 23rd February. 2001 Dr. B. L. Wadhera filed Civil Writ Petition No. 1262 of 2001 in the Delhi High Court. This was followed by Writ Petition No. 1280 of 2001 filed by the employees of BALCO on 24th February. 2001 besides in the High Court of Delhi. On that really day of the month. i. e. . on 24th February. 2001 another employee of BALCO. viz. . Mr. Samund Singh Kanwar filed Civil Writ Petition No. 241 of 2001 in the High Court of Chhattisgarh. While the aforementioned writ requests were pending at that place was a Calling Attention Motion on Disinvestment with respect to BALCO in the Rajya Sabha. Discussions on the said gesture took topographic point in the Rajya Sabha on 27th February. 2001 and the affair was discussed in the Lok Sabha on 1st March. 2001.

The gesture “that this House disapproves the proposed disinvestment of Bharat Aluminium Company Ltd. ” was defeated in the Lok Sabha by 239 ballots to 119 ballots. Soon thenceforth on 2nd March. 2001. Shareholders Agreement and Share Purchase Agreement between the Government of India and Sterlite Industries Limited were signed. Pursuant to the executing of sale. 51 % of the equity was transferred to Sterlite Industries Limited and a check for Rs. 551. 5 crores was received. It is non necessary to mention to the footings of the understanding in any great item except to detect a few clauses which pertain to safeguarding the involvement of the employees of the company.

Clauses H and J of the preamble reads as follows: “H. Capable to Clause 7. 2. the Parties envision that all employees of the Company on the day of the month hereof shall go on in the employment of the Company. J. The SP recognises that the Government in relation to its employment policies follows certain rules for the benefit of the members of the Scheduled Caste/Scheduled Tribes. physically disabled individuals and other socially deprived classs of the society. The SP shall utilize its best attempts to do the Company to supply equal occupation chances for such individuals. Further. in the event of any decrease in the strength of the employees of the Company. the SP shall utilize its best attempts to guarantee that the physically disabled individuals are retrenched at the terminal. ”

Clause 7. 2 which contains the Representations. Guarantees and Covenants of M/s. Sterlite Industries is as follows: “The SP represents and warrants to and compacts with each of the Government and the Company that: ( a ) it has been punctually integrated or created and is validly subsisting and in good standing under the Torahs of the legal power indicated in the preamble to this Agreement ; ( B ) it has the corporate power and authorization to come in into and execute its duties under this Agreement ; ( degree Celsius ) this Agreement has been punctually authorized. executed and delivered by it and constitutes a valid and binding duty enforceable against it in conformity with its footings ; ( vitamin D ) it is non a party to. edge or affected by or capable to any indentation. mortgage. lease understanding. instrument. charter or by-law proviso. legislative act. ordinance. judgement. edict or jurisprudence which would be violated. contravened. breached by or under which default would happen or under which any payment or refund would be accelerated as a consequence of the executing and bringing of this Agreement or the consummation of any of the minutess provided for in this Agreement.

( vitamin E ) Notwithstanding anything to the contrary in this Agreement. it shall non retrench any portion of the labour force of the Company for a period of one ( 1 ) twelvemonth from the Shutting Date other than any dismissal or expiration of employees of the Company from their employment in conformity with the applicable staff ordinances and standing orders of the Company or applicable Law ; and ( degree Fahrenheit ) Notwithstanding anything to the contrary in this Agreement. but capable to sub-clause ( vitamin E ) above. any restructuring of the labour force of the Company shall be implemented in the mode recommended by the Board and in conformity with all applicable Torahs. ( g ) Notwithstanding anything to the contrary in this Agreement. but capable sub-clause ( vitamin E ) above. in the event of any decrease of the strength of the Company’s employees the SP shall guarantee that the Company offers its employees. an option to voluntarily retire on footings that are non. in any mode. less favorable than the voluntary retirement strategy offered by the Company which is referred to in Schedule 7. 4 of the Share Purchase Agreement ; and ( H ) It shall vote all the voting equity portions of the Company. straight or indirectly. held by it to guarantee that all commissariats of this Agreement. to the extent required. are incorporated in the Company’s articles of association. ”

With the filing of the writ requests in the High Court of Delhi and in the High Court of Chhattisgarh. an application for transportation of the requests was filed by the Union of India in this Court. After the notices were issued. the company received assorted notices from the governments in Chhattisgarh for alleged beach of assorted commissariats of the M. P. Land Revenue Code and the Mining Concession Rules. Some of the notices were non merely addressed to the company but besides to persons avering misdemeanor of the commissariats of the codification and the regulations as besides encroachment holding taken topographic point on Government land by BALCO.

This led to the filing of the Write Petition No. 194 by BALCO in this tribunal. inter alia. disputing the cogency of the said notices. During the pendancy of the writ request. the workers of the company went on work stoppage on 3rd March. 2001. Some interim orders were passed in the transportation request and later on 9th May. 2001 the work stoppage was called off. By Order dated 9th April. 2001. the writ requests which were pending in the High Court of Delhi and Chhattisgarh were transferred to this Court being Transfer Case No. 8 of 2001 which pertains to the writ request filed by BALCO Employees’ Union ; Transfer Case No. 9 of 2001 pertains to the writ request filed by Dr. B. L. Wadhera in the Delhi High Court and Transfer Case No. 10 of 2001 is the writ request filed by Mr. Samund Singh Kanwar in the High Court of Chhattisgarh. On behalf of the BALCO Employees’ Union. Shri Dipankar P. Gupta. learned senior advocate submitted that the workingmans have been adversely affected by the determination of the Government of India to divest 51 % of the portions in BALCO in favor of a private party.

He contended that before disinvestment. the full paid-up capital of BALCO was owned and controlled by the Government of India and it’s administrative control co-vested in the Ministry of Mines. BALCO was. hence. a State within the significance of Articles 12 of the Constitution. Reliance for this was placed on Ajay Hasia and Others vs. Khalid Mujib Sehravardi and Others. ( 1981 ) 1 SCC 722 ; Central Inland Water Transport Corporation Limited and Another Vs. Brojo Nath Ganguly and Another. ( 1986 ) 3 SCC 156. He besides contended that by ground of disinvestment the workingmans have lost their rights and protection under Articles 14 and 16 of the Constitution.

This is an inauspicious civil effect and. hence. they had a right to be heard before and during the procedure of disinvestment. The type of audience with the workingmans which was necessary. harmonizing to Shri Dipankar P. Gupta. was whether BALCO should travel through the procedure of disinvestment ; who should be the strategic spouse ; and how should the command of the strategic spouse be evaluated. Mentioning to the assertion of Union of India to the consequence that involvement of the employees has been protected. Shri Dipankar P. Gupta. submitted that in fact there was no effectual protection of the workmen’s involvement in the procedure of disinvestment.

He farther submitted that the workingmans have ground to believe that apart from the sale of 51 % of the portions in favor of Sterlite Industries the Agreement postulates that balance 49 % will besides be sold to them with the consequence that when usually in such instances 5 % of the portions are disinvested in favor of the employees the same would non go on in the present instance. Reliance was placed on the determination of National Textile Workers’ Union and Others vs. P. R. Ramakrishnan and others. ( 1983 ) 1 SCC 228 and it was besides contended that even though there may be no loss of occupations in the present instance but the taking off of the right or protection of Articles 14 and 16 is the civil effect and. hence. the workingmans have a right to be heard. It was submitted that such rights and benefits are both procedural every bit good as substantive.

Procedural benefits and rights includes the right to near High Court under Article 226 of the Constitution and this Court under Article 32 of the Constitution in the event of misdemeanor of any of their rights. This is a major advantage since it is a comparatively fleet method of redressal of grudges which would non be available to employees of private administrations. Cases were given of the substantive rights which flow from Articles 14 and 16 like. right to equality. equal wage for equal work. right to pension including the rule that there can be no favoritism in the affair of allowing or withholding of pension vide Bharat Petroleum ( Erstwhile Burmah Shell ) Management Staff Pensioners vs. Bharat Petroleum Corporation Ltd. and Others. ( 1988 ) 3 SCC page 32 ) . right to inquiry and grounds before dismissal etc.

The aforementioned contentions of Shri Gupta were supported by Shri G. L. Sanghi and Shri Ranjit Kumar. senior advocate. looking for some of the Unions who were interveners in the writ request filed by BALCO Employees’ Union. He submitted that the workers should hold been heard at different phases during the procedure of disinvestment. the mode in which positions may be invited and evaluated by the Government ; the method of rating ; the factors to be taken into consideration and the pick of the strategic spouse ; the footings and conditions under which the strategic spouse will take over the employment of the workers and the footings and conditions of the Share Holders Agreement are the phases in which the workers should hold been heard and consulted.

It was submitted that the determination of the Delhi High Court of 3rd August. 1999 does non come in the manner of these contentions being raised inasmuch as the request at that clip was regarded as premature and the order which was passed really preserves the workers’ rights to raise the contention in future. Repeating these contentions Shri Ravindra Shrivastava. learned Advocate General. State of Chhattisgarh submitted that the State does non dispute the policy of disinvestment per Se on rule as a step of socio-economic reform and for industrial well being in the state. He nevertheless. contended that the execution of the policy of disinvestment in the present instance. has failed to germinate a comprehensive bundle of socio-economic and political reform and to construction the determination devising procedure so as to accomplish in a merely. just and sensible mode. the ultimate end of the policy and that the involvement of the workers in the industrial sector can non be undermined and. hence. any determination which was likely to impact the involvement of the workers and employees as a category as a whole can non and ought non to be taken to the exclusion of such category. lest it may be counter productive.

He contended that the Disinvestment Commission had recommended that some per centum of equity portion may be offered to the workers to beg their engagement in the endeavor and which would travel a long manner in turn outing the disinvestment program meaningful and successful. In this respect. it was non shown from any stuff or record that the Government of India had at any phase addressed itself to this critical facet of the disinvestment procedure or had taken into consideration the likely reverberations on the involvement. right and position of the employees and workers. This non-consideration indicates that there has been an flightiness in non taking into consideration relevant facts in the determination devising procedure.

It is further contended that the impugned determination defeats the commissariats of the M. P. Land Revenue Code and goes against the cardinal footing on which the land was acquired and allotted to the company. Implicit in the entries on behalf of the employees is the challenge to the determination to divest bulk of the portions of BALCO in favor of Sterlite Industries Limited. The first inquiry. therefore. which would originate for consideration. is whether such a determination is conformable to judicial reappraisal and if so within what parametric quantities and to what extent.

On behalf of the Union of India. the Attorney General submitted that since 1990-91 consecutive Governments have gone in for disinvestment. Disinvestment had become imperative both in the instance of Centre and the States chiefly for three grounds. First. despite every attempt the rate of returns of governmental endeavors had been deplorably low. excepting the sectors in which authorities have a monopoly and for which they can. therefore. bear down any monetary value. The rate of return on cardinal endeavors came to minus 4 % while the cost at which the authorities borrows money is at the rate of 10 to 11 % . In the States out of 946 State degree endeavors. about 241 were non working at all ; about 551 were doing losingss and 100 were reported non to be subjecting their histories at all.

Second. neither the Centre nor the States have resources to prolong endeavors that are non able to stand on their ain in the new environment of intense competition. Third. despite repeated attempts it was non possible to alter the work civilization of governmental endeavors. As a consequence. even the strongest among them have been droping into increasing troubles as the environment is more and more competitory and technological alteration has become faster. In support. the Solicitor General submitted that the challenge to the determination to divest on the land that it impairs public involvement. or that it was without any demand to divest. or that it was inconsistent with the determination of the Disinvestment Commission was indefensible.