Judicial consistency at HZL PDF Print E-mail
Thursday, 21 January 2016 00:00
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How many times will the case be heard, and why?

Though the Supreme Court has, as yet, not ruled against the government selling its residual stake in Hindustan Zinc Limited (HZL), the case is getting increasingly curious. If the case is that HZL was sold without getting Parliament’s approval—HZL was created by an Act of Parliament—the fact is that, when the company was privatised in 2002, there was no court judgment saying that Parliament’s approval was required; that came only in September 2003 in the judgment about privatising HPCL and BPCL. So, the HZL sale was certainly not illegal at the time it was done, and what is being sought to be sold now are the shares of a private company where Parliament has no role whatsoever. Indeed, given how HZL’s mining capacity has risen from 3.5 million tonnes then to 10.3 million tonnes today, sales from R1,470 crore in FY02 to R14,589 crore in FY15 and profits from R68 crore to R8,178 crore, there can be little doubt that the company and the government have benefitted enormously from the privatisation. Assuming the final ruling is that the shares cannot be sold till Parliament approval is got, the same logic will then need to be applied uniformly. Maruti was created by an Act of Parliament but no Parliament approval was sought when the shares were sold or when control was handed over to Suzuki; indeed, in May 2007, several years after the HPCL/BPCL judgment, the government sold its residual stake in Maruti for R2,360 crore without asking for Parliament’s sanction. Is this to be undone? Coal India was also formed through an Act of Parliament, but its shares are being sold without the specific approval of Parliament.

Even more interesting is the manner in which the case is getting heard time and again, though in a different form. In December 2012, the writ petition by the Maton Mines Mazdoor Sangh was dismissed by a bench headed by the Chief Justice of India, along with Justices Nijjar and Chelameswar. In July 2014, after the case was resurrected in a different form, a bench headed by the Chief Justice (Justice RM Lodha, by this time) along with Justices Lokur and Joseph not only dismissed the petition, they imposed a fine of R50,000 for frivolous litigation—this was later reduced by half when the petitioner sought leniency. Apart from the fact that a 14-year-old sale cannot be undone and the futility of hearing cases so long after the principal event, the courts stance on such events is also unclear. In the Delhi government’s odd-even policy, the Delhi High Court refused to intervene saying it was a ‘policy’ decision; in the RJio public interest litigation (PIL) the Supreme Court asked the petitioner whether it was a private interest litigation since it was not apparent what the public interest was, given the firm had bought the spectrum in an open auction.

Indeed, given how much money is being wasted on PSUs, the public interest probably lies in shutting them down at the earliest. You just have to look at the money being spent in trying to revive Air India—R22,000 crore so far—and juxtapose this against the benefits of spending this money elsewhere. Or take the case of the chronically loss-making MTNL which simply cannot be revived given its salary-to-income ratio is a whopping 84% as compared to 3-5% for market leaders like Airtel or Vodafone. Keeping these PSUs alive may benefit the workers employed in them, but what about the taxpayers who are paying for annual bailouts or, in the case of a HZL, not being allowed to benefit from a sale at a good price?


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