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TMI Blog1994 (4) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... rder, if necessary, during the Vacation. Sri Bapu Heddur Shetty submits that he would make every effort to file statement of objections as early as possible and the matter could be heard after the pleadings are completed. Since the questions raised in this petition will have far-reaching implica-tions and will have an impact on the question of disinvestment in Public Sector Undertakings, the respondents are directed to file their statement of objections at the earliest. MEMORANDUM OF WRIT PETITION UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA The abovementioned petitioner submits as under : 1. That this writ petition is being filed by and on behalf of the employees of Bharat Electronics who are deeply concerned about the future of their factory and the consequences of the totally arbitrary and unreasonable procedure by which the Union of India has begun to implement its policy of disinvestment in Public Sector Enterprises. This disinvestment has already resulted in the loss of crores of public money. 2. That the policy of disinvesting shares of profit-making public sector enterprises is a part of the Government's new Economic Policy of liberalisation. The ostensible purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As on the ground that the Committee had very little time and the selection of PSEs had not been finally completed. The DPE stated that to complete the work in time, it was necessary to do away with the unwieldy size of the Committee and to make maximum use of the available talents. It added that the absence of FAs of the Ministries in the Committee was not of much conse- quence as representatives from available fields including PSEs were included in the Committee. It was also stated that the disinvestment was not a normal activity for which rules were laid. The reply is not tenable as the Committee constituted by the Ministry of Finance had, as its member, a representative of the Department of Expenditure. However, because of a subsequent decision by the Chairman, the expertise of the Department of Expenditure could not be availed of. (b )The final report was signed by only four out of 14 members of the Committee, including 5 co-opted members. It may be inferred that the deliberations and recommendations of the Committee did not reflect fully the expertise available even within the Government. Some of their suggestions which could have had important bearing on the outcome of disi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that the Government's haste in implementing its disinvestment policy is a reflec- tion of its intention to once again sell shares well below the market price. The Government has chosen to disinvest through the method of inviting tenders instead of by Public issue of shares in direct contradiction of the C.A.G.'s report's recommendation which states that the Government ought to have disinvested after generating investor enthusiasm. 6. That the Controller of Capital Issues guidelines on evaluation of shares is not valid for the evaluation of shares of the Public Sector, because the assets of the Public Sector are grossly undervalued in the books and also Bharat Electronics specialises in the area of defence electronics where the main objective is to cater to the country's defence needs and not the making of profits. Yet our profits have risen year after year and peaked 675 million in 1991-92 as against 269 million ten years ago. The Bangalore complex of Bharat Electronics owns more than 800 acres of land in a prone area, and is, therefore, extremely asset rich. These assets including invaluable land, plant and machinery lie spread over nine units in different parts of India. U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosure and investor protection. These Guidelines are meant for issue of new shares and also applicable to any offer of shares made to the public at large irrespective of whether it is a disinvestment or fresh issue of shares, for instance, Videocon Leasing and Industrial Finance Ltd. Company which only recently disinvested its shares and also went through the process of having its documents approved by SEBI. The so-called brochure on BEL issued by the Government for the latest ground of disinvestment is in violation of the SEBI guidelines in contrast to the Videocon prospectus. The said two documents are annexed hereto and marked as Annexure 'D'. 11. That the Government has totally arbitrarily and without any reason chosen not to price the issue and instead decided to adopt the tender method of disposing of shares. The public issue of shares would have resulted in the ordering of the share-holding pattern of the company and given a chance to the citizens of India, who are also investors--a chance to participate in the process of disinvestment. Instead the Government has decided to give a golden opportunity to Foreign Institutional Inves- tors to appropriate national assets at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... east 26 per cent of the shares so that they may effectively take part in the decision-making of the factory's Management. We have already staked our claim in this regard vide our letter annexed as Annexure 'F'. 17. That the petitioner has not filed any other writ petition either in this court or any other court on the subject matter of this petition and we have no other alternative or equally efficacious remedy other than filing before this Hon'ble Court. 18. In the circumstances of the case this writ petition is presented under Article 226 of the Constitution of India on the following among other grounds: 19. Grounds I. That the Department of Public Enterprises has failed to exercise its duty satisfactorily since the elaborate censure of the earlier round of disinvestment made by the Comptroller and Auditor General of India in his report to the President of India (No. 14 of 1993) has been virtually ignored. Such callous behaviour and non-application of mind vitiates the impugned notification and renders it liable for judicial review. The guidelines that arise out of the CAG's report are the following and each of these continue to be violated : (a)That sufficient investor enth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tential market value of BEL shares, thus, causing further losses in offloading, yet another 11 per cent of equity. Prayer For the abovementioned reasons it is prayed that this Hon'ble Court be pleased to: A. Issue an appropriate writ/order/Direction in the nature of mandamus. (a)Quashing the decision to disinvest through the tender system. (b)Compelling Respondent Nos. 1 and 2 to hold prior consultations with all affected interests, such as, the management of BEL, the negoti- ating trade unions and the officers Association - National Textile Workers' Union v. P.R. Ramakrishnan AIR 1983 SC 75) (c)Compelling Respondents 1 and 2 to ensure reservation of a substan- tial proportion of the share up to 26 per cent for all employees in order that the Constitutional goal of workers participation as laid down in article 43A is effectively materialised before further disinvestment. (d)Directing Respondents 1, 2 and 3 to work out an effective and efficient employees stock option scheme as already suggested by SEBI and announced by the GOI itself, in consultation with the negotiating Trade Unions. (e)Directing Respondents 1 and 2 to make adequate preparations and to apply their min ..... X X X X Extracts X X X X X X X X Extracts X X X X
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