The Bombay high court hearing the pleas against government’s disinvestment in BPCL stated that “Government is clearly within its rights, just like any other ordinary shareholder, to sell its shares or even its controlling stake. Strategic sale of its stake is a matter of its own policy” and further said “the Government cannot be faulted merely for adopting one particular policy rather than the other”
The multiple petitions were filed in the form of one leading writ petition by the Federation of all Maharashtra Petrol Dealers Association, which questioned the legality of the executive decision of the government to disinvest and multiple PILs filed for the cause of public interest which was likely to be affected by the union government’s executive decision.
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The Burmah Shell oil storage and distributing company of India ltd. was an English company which was acquired by the Indian government in 1976 under the Burmah Shell (Acquisition of Undertakings in India) Act, 1976. The name of the company was changed to Bharat Petroleum Corporation Limited (BPCL) in 1997 and all rights, titles and liabilities of the Burmah Shell Company were transferred to BPCL. In 2002 the union government sought to disinvest in the BPCL but such disinvestment was challenged in the Apex court in the case of Centre for Public Interest Litigation vs. Union of India and it was held that the union government could not disinvest in the companies through direct executive action without repealing or amending the acquisition act under which the corporation was acquired by the union government. The government repealed the Burmah Shell Acquisition Act by a repealing act which was granted presidential assent in 2016 and in 2019 the cabinet committee of economic affairs granted its in-principle approval for disinvestment of government’s stake of BPCL against which the present petitions stood in the Bombay high court.
The petitioner relying on the aforementioned Supreme Court case of the centre for public interest litigation challenged the legality of the union government’s decision to disinvest on the ground that the Supreme Court judgement provided for parliament’s legislative approval for such disinvestment and repealing the act was not assented for disinvestment by the parliament and such disinvestment without the parliamentary assent will be void. The petitioner also relied on instances of disinvestment of companies like NEPA and Tyre Corporation where parliamentary approval was taken before disinvestment.
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The bench of justice SC Gupte and Justice Madhav Jamdar observed that the supreme court judgement in the case of the centre for public interest litigation did not lay any rule for parliamentary approval for disinvestment but only provided that any disinvestment in government undertaking was barred by the act under which the undertaking was acquired and parliamentary amendment or repealing of such act was necessary before disinvestment to remove any statutory limitation on the exercise of executive powers of the government regarding such disinvestment and remarked that “The parliament has repealed the Burmah Shell Acquisition Act by Act No.23 of 2016. The effect of such repeal is that as of today and for our purposes, it is as though the statute never existed. Absent the statute of acquisition, there is no legal impediment for disinvestment by the Union of its controlling stake in BPCL. As we have noted above, the only illegality involved in the executive action of disinvestment, according to the law stated by the Supreme Court in Centre for Public Interest Litigation (supra), was the limitation found in the statute of acquisition for changing the public character of the undertaking. Once that limitation goes away, the Government is clearly within its rights, just like any other ordinary shareholder, to sell its shares or even its controlling stake.” Regarding the petitioner’s contention over the repealing act the court said “A repeal is but a repeal; it removes from the statute book an enactment which had held the field until then, and it does so in a manner as though the statute never existed. The courts cannot thereafter question the motive behind such removal – whether such removal was simply on the ground that the original statute had become obsolete or whether such removal was actually informed by the parliament’s tacit approval of possible disinvestment which may follow as a result of the repeal.” and further stated that “It is not open to courts to scrutinize the legislative process in that manner.”
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Other petitioners also contented over the consequences of such disinvestment and its effects on the rights of poor consumers, small businesses, and rights of SC, ST and OBCs and physically handicapped of reservation in jobs which would be lost. The court opined that none of these rights was fundamental rights and did not violate any other constitutional rights. The court recognised socio-economic policymaking as a function of the government and said “The present governing dispensation is well within its powers to take such decision. The successive Governments have over the last few years moved in the direction of privatisation.” Thus finding no merit in the petitions the court dismissed all pleas against the disinvestment of BPCL.
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