2001 (12) TMI 808 - SC - Companies Law

Validity of the decision of the Union of India to disinvest and transfer 51 per cent shares of Bharat Aluminium Co. Ltd. ( BALCO ) Whether BALCO should go through the process of disinvestment? Held that - 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. None of these contingencies arise in this present case. In the case of a policy decision on economic matters, the Courts should be very circumspect in conducting any enquiry or investigation and 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. Lastly, 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 Court is satisfied for good and valid reasons, that there will be irreparable and irretrievable damage can an injunction 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. Thus the disinvestment by the Government in BALCO was not invalid.

Issues Involved:
1. Validity of the decision of the Union of India to disinvest and transfer 51% shares of Bharat Aluminium Co. Ltd. (BALCO).
2. Impact of disinvestment on the rights and protections of BALCO's employees.
3. Judicial review of economic policy decisions.
4. Role of natural justice in the disinvestment process.
5. Applicability of the Samatha judgment on tribal land transfer.
6. Public Interest Litigation (PIL) filed by a non-stakeholder.
7. Validity of show-cause notices issued by the State of Chhattisgarh to BALCO.

Detailed Analysis:

1. Validity of the Decision of the Union of India to Disinvest and Transfer 51% Shares of BALCO:
The primary issue was the validity of the Union of India's decision to disinvest and transfer 51% shares of BALCO. The Supreme Court held that the decision to disinvest was a policy decision involving complex economic factors, which is not amenable to judicial review unless it is shown to be capricious, arbitrary, illegal, or uninformed. The Court emphasized that economic policies are the prerogative of the elected government and are not subject to judicial review unless they violate constitutional or statutory provisions.

2. Impact of Disinvestment on the Rights and Protections of BALCO's Employees:
The employees contended that disinvestment would result in the loss of their rights and protections under Articles 14 and 16 of the Constitution. The Court held that the employees' rights were adequately protected through the Shareholders Agreement, which included provisions against retrenchment for one year and ensured that any restructuring would follow applicable laws. The Court also noted that the employees' rights under the Industrial Disputes Act would continue to apply post-disinvestment.

3. Judicial Review of Economic Policy Decisions:
The Court reiterated that it is not within the domain of the judiciary to question the wisdom or advisability of economic policies. The Court's role is limited to ensuring that the decision-making process is fair, free from unreasonableness, and complies with the norms of public administration. The Court cited several precedents to emphasize that economic decisions are best left to the expertise of the executive and legislative branches.

4. Role of Natural Justice in the Disinvestment Process:
The employees argued that they should have been consulted during the disinvestment process. The Court held that there is no principle of natural justice that requires prior notice and hearing to persons generally affected by an economic policy decision. The Court noted that while it is desirable for the government to consult stakeholders, it is not a legal obligation.

5. Applicability of the Samatha Judgment on Tribal Land Transfer:
The State of Chhattisgarh contended that the transfer of tribal land to a non-tribal entity (Sterlite Industries) violated the principles laid down in the Samatha judgment. The Court distinguished the present case from Samatha, noting that the provisions of the Madhya Pradesh Land Revenue Code, 1959, are not similar to the Andhra Pradesh Regulation considered in Samatha. The Court held that the transfer of land to BALCO was valid and the change in management did not imply a new transfer of land.

6. Public Interest Litigation (PIL) Filed by a Non-Stakeholder:
A PIL was filed by a non-stakeholder challenging the disinvestment. The Court reiterated that PIL should not be used as a tool for publicity or to challenge economic decisions unless there is a clear violation of constitutional or statutory provisions. The Court dismissed the PIL, emphasizing that economic policy decisions are not the appropriate subject matter for PIL unless there is a direct violation of law.

7. Validity of Show-Cause Notices Issued by the State of Chhattisgarh to BALCO:
BALCO challenged various show-cause notices issued by the State of Chhattisgarh. The Court held that it was not appropriate to entertain the challenge under Article 32 of the Constitution, as the petitioner had adequate alternative remedies available under the relevant Acts and could approach the High Court under Article 226.

Conclusion:
The Supreme Court upheld the validity of the Union of India's decision to disinvest 51% shares of BALCO, emphasizing that economic policy decisions are within the prerogative of the elected government and not subject to judicial review unless they violate constitutional or statutory provisions. The Court also held that the employees' rights were adequately protected and dismissed the PIL filed by a non-stakeholder. The challenge to the show-cause notices issued to BALCO was not entertained, as alternative remedies were available.

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