SC allows Centre to sell Rs. 40,000-crore HZL shares

Orders CBI probe into 2002 divestment in Hindustan Zinc

VISAKHAPATNAM, ANDHRA PRADESH, 05/09/2017: The main gate of Zinc Smelter which once thrived with activity has now looks deserted after the shutdown of the unit in 2013. Photo:C.V.Subrahmanyam

The Supreme Court on Thursday permitted the Centre to go ahead with the proposed sale of its 29.54% residual shareholding in Hindustan Zinc Limited (HZL) in the open market.

“The Union government... is exercising its rights as a shareholder,” a Bench of Justices D.Y. Chandrachud and B.V. Nagarathna held in a 62-page judgment. The government estimates the value of its shareholding to be about Rs. 40,000 crore. It said the “considered decision” to offload it in the open market was to ‘strengthen revenues for public purposes’.

“Since the disinvestment of 70.5% shares in the first instance is not under challenge, HZL has ceased to be a government firm governed by the Nationalisation Act 1976. Effective management and control stand transferred to Sterlite Operations and Ventures Limited.

“The transfer of 29.54% of the residual equity shareholding by the Union Government of a company in which it has no surviving control would only raise finances for the government and does not impact management or control,” the court noted.

However, the court directed a CBI probe into the 2002 disinvestment in HZL, listing several reasons for suspecting foul play, including the decision at the time to sell 26% instead of 25%.