Departure From Balco

New Delhi, September 16: | Updated: Sep 17 2003, 05:30am hrs
By asking the government to seek the approval of Parliament for the privatisation of Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corporation Ltd (BPCL), the Supreme Court has for the first time given a verdict that upsets the privatisation process.

So far, the ministry of disinvestment (MoD) has got favourable judgements from the judiciary be it the case of privatisation of Bharat Aluminium Company (Balco), the sale of Jessop & Co or various properties of India Tourism Development Corporation.

In fact, the Balco judgement has been hailed as landmark by disinvestment minister Arun Shourie and other champions of privatisation.

In the Balco judgement in December 2001, the apex court not only dismissed the petition challenging privatisation but also made observations which have far-reaching consequences and have been referred by lower courts. The Supreme Court said, Wisdom and advisability of economic policies are ordinarily not amenable to judicial review unless it can be demonstrated that the policy is contrary to any statutory provision or the Constitution. In other words, it is not for the courts to consider the relative merits of different economic policies and consider whether a wiser or better one can be evolved. For testing the correctness of a policy, the appropriate forum is Parliament and not the courts.

Further, the allegations of lack of transparency or that the decision was taken in a hurry or there has been an arbitrary exercise of power are without any basis.

The Supreme Court also dismissed the charges of improper method of privatisation. The offer of the highest bidder has been accepted. This was more than the reserve price which was arrived at by a method which is well recognised...Moreover, valuation is [a] question of fact and the court will not interfere in matters of valuation unless the methodology adopted is arbitrary.

In the recent judgement on the privatisation of Jessop & Co, the two-judge bench of Calcutta high court referred to the Balco judgement of the apex court. It also said that it will not interfere in the matter unless the methodology adopted is arbitrary.