BALCO EMPLOYEES UNION (REGO.) v. UNION OF INDIA AND ORS.

BALCO EMPLOYEES UNION (REGO.) A v. UNION OF INDIA AND ORS.

DECEMBER 10, 2001

[B.N. KIRPAL, SHIVARAJ V. PATIL AND B P. VENKATARAMA REDD!, JJ.]

Disinvestnzent:

Disinvestment of 51% equity qf Balco, a Public Sector Undertaking, by Central Govemnient to a Strategic Partner and transfer o,fnranagement thereof- c Amenability to Judicial Review-Held, it is cm ec~nomic policy decision qf the Govenunent and hence not tunenable to judicial review-Constitution o,f India, 1950 -Articles 32 & 226.

Protection of workers' rights and interests-Availability of under the D Constitution-Held, not available-Hoivever, on .facts, st~{ficient sqfeguards anl/ protection are built in various agree111ents entered into with the Strategic Partner besides availability of protection under existing laws-Constitution of India, 1950-Articles 12, 14 and 16.

Non-consultation with State Govemment by Union of India regan/ing E disenvestment-0.(fer by the State Government to purchase 51% equity at a higher price-Held, on facts, State Government was not oblivious of the disinvestment of BALC0-0.[fer not valid since the disinvestment is over.

Disinvestn1ent Co1nn1ission reconunendations to Union of India-Bind- F ing nature-Held, not binding.

Valuation o,f a:-;sets to arrive at a reserve price-Correctness thereof- Held, valuation is a question of fact and hence, not an1enable to Judicial review-On facts, proper procedure has been .followed in valuation. G Disinvestment decision of BALCO-Transparency of-Held, there is complete transparency-On .fai:ts,fair and equitable procedure was followed in carrying out disinvestn1ent-Clain1 by the State Government uncharitable and baseless.

Trans.fer of land, which was originally a tribal land and given on lease H· 5ll

p. 512

A to BALCO, to a non-tribal o;; disinvestment-Validity of-Held, change qf management or shareholding does not involve tran~fer of land-Allegation baseless since original tran~fer of land to BALCO WllS not questioned-M.P. Land Revenue Code, 1959-Mining Concession Rules.

Ad111inistrtitive Unv: B Principles o,f Natural Justice-Right o.f hearing and consultation with employees b~fore taking economic policy decisions-Availability of-Held, not available. • Public Interest Litigation : c Petition Disinevstment decisions-Admissibility of-Grant of Exp- Oil parte reli~f-Held, not admissible as it is not meant to challenge financial or economic decisions of the Government-Ex-parte reli4should be granted after \ taking undertaking from the Petitioner to indemnify any loss or damage if PIL is dismissed since any delay will be contrary to public interest. D Mis. Bharat Aluminium Comapny Limited (BALCO) was incorpo- rated in 1965 under the Companies Act, 1956 as a Public Sector Undertak- ing (PSU). The State Government provided land partly by transfer of its own land and partly through land acquisition to the undertaking for its establishment. Since 1990-91, successive Central Governments had been planning to disinvest some of the PSUs and in 1996, the Union of India constituted a Disinvestment Commission as an independent non-statutory advisory body and set out broad terms of reference. In 1997, the Commis- sion recommended the Union of India to privatise BALCO and suggested disinvestment of 40% of equity holding to a Strategic Partner and dilution of remaining 60 % holding through public offer over a period of time. Subsequently, on the basis of the revised recommendations of the Commis- sion, Chairman suggested the Union of India to offer 51 % or more to the Strategic Partner along with transfer of management. The Union of India approved the sale of 51 % equity and appointed a Global Advisor through competitive bidding process to carry out the process cf disinvestment.

This decision was challenged in 1999 by the BALCO Employees ~ Union by filing a Writ Petition in the High Court of Delhi. The High Court disposed of the Writ Petition on the basis of a mutual consent that advance intimation will be given to the employees before taking a final decision on

BALCO EMPLOYEES UNION (REGD.) v. U.O.l. 513 disinvestment. A

In June 2000, the Global Advisor issued global advertisements in leading journals and newspapers calling for 'Expression of Interest' for acquiring 51 % equity in BALCO. Eight companies expressed their inter- est. The Global Advisor, in consultation with the Union of India, short- listed three companies and requested them to submit their financial bids. B Meanwhile, asset valuation of BALCO was do11e to fix reserve price of 51 % equity through a Valuer independently. the reserve price was fixed at Rs. 514.40 crores. The highest bid of Rs. 551.50 crores was aceepted by the Union of India. After passing a resolution in the Lok Sabha, a Sharehold- ers Agreement and a Share-Purchase Agreement between Union of India C and the highest bidder were signed as per the procedure for disinvestment.

A Writ Petition by the Employees' Union was filed in the High Court of Delhi challenging the disinvestment of BALCO by the Union of India. A Public Interest Litigation (PIL) was also filed in the same High Court. Another Writ Petition was filed by an employee in the High Court of D Chattisgarh. In the meantime, BALCO received notices from the State Government authorities for alleged breach of various provisions of the M.P. Land Revenue Code, 1959 and the Mining Concession Rules. BALCO filed a Writ Petition under Article 32 of the Constitution of India before this Court. The Writ Petitions filed before the High Courts were trans- E ferred to this Court and all the cases were heard together.

Petitioner-Employees Union contended that BALCO is a State under Article 12 of the Constitution of India and hence by disinvestment of BALCO, the employees lost their rights and protection under Article 14 and 16 of the Constitution; and that the employees have a right to be heard before and during the process of disinvestment.

The State Government, besides supporting the contention of the Employees Union contended that the implementation of the disinvestment policy has failed to evoke a comprehensive package of socio-economic and political reform towards implementation of the policy of disinvestment; that it was not consulted by the Union of India in the process of disinvestment and that it was prepared to offer a higher value than the one accepted; that the Union of India had deviated from the recommendation of the Commis- sion by disinvesting 51 % of the holding on the basis of a suggestion of the Chairman of the Commission; that the method of valuation of the assets of H

p. 514

A the company was faulty as some assets were not taken into considera.tion for valuation and that the accepted offer viz., Rs. 551.50 crores did not represent the correct value of 51 % equity along with controlling interest; that the whole process of disinvestment lacked transparency; that the 'f disinvestment decision defeats the provisions of the M.P. Land Revenue Code, 1959 and goes against the fundamental basis on which the land was B acquired for the purpose of the company; that the land could not be transferred to a non-tribal.

Public interest litigant, challenging the disinvestment, contended that he had been closely connected with PSUs and therefore had the locus standi c to file the Writ Petition.

Respondent-Union of India contended that tllte wisdom and advis- ability of economic policies of a Government are not amenable to judicial review; and that the challenge to the decision to disinvest on the ground that it impairs public interest or that it was without any need to disinvest D or that it was inconsistent with the decision of the Commission is unten- able.

BALCO submitted that the entire rationale and process of disinvestment before taking a final decision was explained to the employ· ees; and that the various representations made by the Employees Union E had been considered before finalising the disinvestment.

Dismissing the petitions, the Court

H 1.2. The policies of the Government ought Mt to remain static. With

BALCO EMPLOYEES UNION (REGO.) v. U.0.l. 515 the change in economic climate, the wisdom and the manner for the A Government to run commercial ventures may require reconsideration. What may have been in the public interest at a point of time may no longer be so. While it was a policy decision to start BALCO as a company owned by the Government, it is as a change of policy that disinvestment has now taken place. If the initial decision could not be validly challenged on the B same parity of reasoning, the decision to disinvest also cannot be impugned without showing that it is against any law or ma/a fide. [551 ·B·CJ

1.3. In a democracy, it is the prerogative of each elected Government to follow its own policy. Often a change in Government may result in the shift in focus or change in economic policies. Any such change may result c in adversely affecting some vested interests. Unless any illegality is com- mitted in the execution of the policy or the same is contrary to law or ma/a fide, a decision bringing about change cannot per se be interfered with by the Court. [572-F] D 1.4. 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 Court to consider 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 the Parliament E and not the Court. Here the policy was tested and the Motion defeated in the Lok Sabha on 1st March, 2001. [572-G-H]

1.5. In the case of a policy decision on economic matters, 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. [572-G· HJ

Rustom Cavasjee Cooper v. Union of India, [1970] 1 SCC 248 CB, reWoo. G

Fertilizer Corporation Kamgar Union (Regd.), Sindri and Ors. v. Union of India and Ors., [1981] 1 SCC 568; State o.f M.P. and Ors. v. Nandlal Jaiswal & Ors., (1986] 4 SCC 566; G.B. Mahajan and Ors. v. Ja/gaon Municipal Couµcil and Ors., [1991) 3 SCC 91; Peerless General Finance and Investment H

516 SUPREME COURT REPORTS [200 l] SUPP. 5 S.C.R. A Co. Ltd. and Anr. v. Reserve Bank of India, [1992] 2 SCC 343; Premium Granites and Anr. v. State of Tamil Nadu and Ors., [1994] 2 SCC 691; Delhi Science Forum and Ors. v. Union of India and Anr., [!996] 2 SCC 405; R.K. Garg v. Union of India and Ors., [1981] 4 SCC 675; M.P. Oil Extraction and Anr. v. State ~f M.P. and Ors., [1997] 7 SCC 592; State ~f Pun;ab and Ors. v. B Ram Lubhaya Bagga and Ors., [1998] 4 SCC 117; Bhavesh D. Parish and Ors. v. Union of India and Anr., [2000] 5 SCC 471 and Nannada Bachao Ando/an v. Union ~(India and Ors., [2000] 10 SCC 664, referred to.

2.1. The workers may have interest in the manner in which the company is conducting its business as the policy decision may have an c impact on the workers' rights, nevertheless it is an incidence of service for an employee to accept a decision of the employer which has been honestly taken and which is not contrary to law. Even a govemment servant, having the protection of not only Articles 14 and 16 of the Constitution but also of Article 311, has no absolute right to remain in service. Hence, non-govern· D ment employees working in a company which by reason of judicial pro· nouncement may be regarded as a State for the purpose of Part III of the Constitution, cannot claim a superior or a better right than a government servant and impugn its change of status. [548·B·D]

Ajay Hasia and Ors. v. Khalid Mujib Sehravardi and Ors., [1981] 1 SCC E 722; Central Inland Willer Transport Corporation Ltd. and Anr. v. Brajo Nath Ganguly and Anr.. [1986] 3 SCC 156; Bharat Petroleum (Erstwhile Burmah Shell) Management Stq[f Pensioners v. Bharat Petroleum Corporation Ltd. and Ors., [1998] 3 SCC 32, referred to.

F 2.2. The policy of disinvestment cannot be faulted if as a result thereof the employees lose their rights or protection under Articles 14 and 16 of the Constitution. In other words, the existence of rights of protection under Articles 14 and 16 of the Constitution cannot possibly have the effect of vetoing the Government's right to disinvest. The employees can· not claim a right of continuous consultation at different stages of the disinvestment process. If the disinvestment process is gone through with· out contravening any law, the normal consequences as a result of disinvestment must follow. [548-G-H; 549-A]

State of Haryana v. Shri Des Raj San!(ar and Anr., [1976] 2 SCC 844, ,H relied on.

BALCO EMPLOYEES UNION (REGD.) "· U.0.1. 517 Southern Structural Staff Union v. Managemenl of Southern Structural A Ltd. & Anr., (1994) 81 Comp. Cases 389, approved.

2.3. The Government could have run the industry departmentally or in any other form. When it chooses to run an industry by forming a company and it becomes its shareholder then under the provisions of the Companies Act as a shareholder, it would have a right to transfer its B shares. When persons seek and get employment with such a company registered under the Companies Act, it must be presumed that they accept the right of the directors and the shareholders to conduct the affairs of the company in accordance with law and at the same time they can exercise the right to sell their shares. As a result of disinvestment of 51 % of the c shares of the company, the management and control, no doubt, has gone into private hands. Nevertheless, it cannot, in law, be said that the em· ployer of the workmen has changed. The employees continue to be under the company and change of management does not in law amount to a change in employment. [549-B·C] D 2.4. The minutes of the meeting held between the Union of India and ., BALCO with the petitioner disclose that, in principle, the petitioner was not against disinvestment but were concerned with their interest being suffi· cientiy safeguarded. In. the Shareholders Agreement between the Union of India and the Strategic Partner, it is provided that there would be no re· E trenchment of any worker in the first year after the closing date and there· after restructuring of the labour force, if any, would be implemented in a manner recommended by the Board of Directors of the company. It further mandates that in the event of reduction in the strength of its employees is required, then it is to be ensured that the company offers its employees an option to voluntarily retire on terms that are not in any manner less favour· F able than the Voluntary Retirement Scheme offered by the company on the date of the arrangement. Beside, BALCO undertook before this Court, that it will not retrench any worker who is in the employment on the date of takeover of the management by the Strategic Partner, other than any dis· missal or termination of the worker(s) of the company from their employ- G ment in accordance with the applicable staff regulations and standing or· ders of the company or other applicable laws. [552-E-H; 553-A]

2.5. 'f!te workers' interest are adequately protected in the process of disinvestment. The existing laws adequately protect workers' interest and no decision affecting a huge body of workers can be taken without the prior H •

518 SUPREME COURT REPORTS [200 I] SUPP. 5 S.C.R. A consent of the State Government. Further more, the service conditions are governed by the certified order of the company and any change in the con- ditions thereto can only be made in accordance with law. It is clear from the facts that safeguarding the interest of the workers was one of the concerns of the Government. Representations had been received from the Trade Union leaders and effort was macje to try and ensure that the process of disinvestment did not adversely affect the workers. [553-B; 556-B]

2.6. It will not be open to a Court to consider whether there has been a gross failure to evolve comprehensive package towards implementation of the policy on disinvestment. In the process of disinvestment, it is evident that the Union of India was aware of the interest of the workers and employees as a class. It was precisely for this reason that safeguards were inserted in the Shareholders Agreement. These terms were incorporated in the agreement after the demands of BALCO employees were considered by the Union of India. (558-A; B]

D 3.1. In taking policy decision in economic matters at length, princi- ples of natural justice have no role to play. While it is expected of a responsible employer to take all aspects into consideration including wel- fare of the labour before taking any policy decision that, by itself, will not entitle the employees to demand a right of hearing or consultation prior to the taking of the decision. [548-D-E]

3.2. Merely because the workmen may have protection of Articles 14 and 16 of the Constitution, °by regarding BALCO as a State, it does not mean that the erstwhile sole. shareholder viz., Government had to give the workers prior notice of hearing before deciding to disinvest. There is no principle of natural justice which requires prior notice and hearing to persons who are generally affected as a class by an economic policy deci- sion of the Government. However, it is the case of the Union of India that the workers had been fully informed about the process of disinvestment through an ongoing dialogue. [548-F] G 3.3. Employees of the company may have an interest in seeing as to how the company is managed, bnt it is unacceptable that in the process of disinvestment, the principles of natural justice would be applicable and that the workers, or for that matter any other party having an interest therein, would have a right of being heard. For good goveranance and H

BALCO EMPLOYEES UNION (REGD.) v. U.0.1. 519 administration whenever such policy decisions are taken, it is desirable that there shonld be wide range of consnltations including considering any representations which may have been filed, but there is no provision in law which would require a hearing to be granted before taking a policy deci- sion. In exercise of executive powers, policy decisions have to be taken from time to time. It will be impossible and impracticable to give a formal hearing to those who may be affected whenever a policy decision is taken. One of the objects of giving a hearing in application of the principles of natural justice is to see that illegal action or decision does not take place. Auy wrong order may adversely affect a person and it is esssentially for this reason that a reasonable opportunity may have to be granted before passing of an administrative order. In case of the policy decision, however, c it is impracticable, and at times against the public interest, to do so, but this does not mea.n that a policy decision which is contrary to law cannot be challenged. Not giving the workmen an opportunity of being heard cannot per se be a ground of vitiating the decision. If the decision is otherwise illegal as being contrary to law or anyConstitutional provision, the persons D affected like the workmen, can impugn the same, bot not giving a pre decisional hearing cannot be a ground for quashing the decision. [556-C-F]

3.4. In judicial proceedings where rights are likely to be affected, prin- ciples of natural justice would require the Court to give a hearing to the party against whom an adverse or unfavourable order may be passed. No E judicial or quasi-judicial functions are exercised by the Government when it decides, as a matter of policy, to disinvest shares in a Public Section Under- taking. While it may be fair and sensible to consult the workers in a situation of change of management, there is, however, in law no such obligation to consult in the process of sale of majority shares in company.(557-B-D] F

National Textile Workers' Union and Ors. v. P.R. Ramakrishnan, (1983] I 1 sec 228, distinguished.

Pm.f. Babu Mathew and Ors. v. Union of India and Ors., (1997] 90 Company Cases 455, approved. G

4Copy pinpoint4. The grievance of alleged non-consultation of the State Govern- ment in the process of disinvestment of BALCO is a matter between the State Government and the Union of India and such grievance cannot be raised by the State against the Union of India in the proceedings initiated H

p. 520

A by the workmen before the Court. However, it is unbelievable that during the entire process of disinvestment of BALCO, the State Government was oblivious of what was happening.· Wide publicity was given at various stages in connection with the disinvestment. It was after doe pnblicity a Global Adviser was appointed and thereafter advertisement was issued in an effort to select the Strategic Partner. The whole process of disinvestment B of BALCO took place over a period of about two years. The issue was even debated by members in the Lok Sabha. There wa~ nothing to prevent the State Government at any stage prior to the selection of the Strategic Partner, either to forward its views or a representation or even to make an offer of buying the 51 % of the shares which were being sold. Once c Sharesholders' Agreement has been signed, the offer of the State Govern- ment to buy 51 % equity shares in the company for a higher value of Rs. 551.41 crores would be of no ronsequence. This offer did not see the light of the day till the start of the litigation. [558-D-GJ

5Copy pinpoint5. The Chairman of the Commission requested the Government to D consider strategic sale of 51 % or more of the equity instead of the recom- mendation of the Commission for sale of only 40 % of the equity. From the facts, it is not possible to accept the contention that the Union of India deviated from the advise given by the Disinvestment Commission. The advice of the Commission was not binding on the Union of India. Further, E the terms of reference and the provisions contained in the Resoloution which required the disinvestment under the supervision of the Commission and the Commission advising the Government on matters like considera- tion of the interests of the stake-holders, workers, consumers etc., were deleted by the subsequent Resolution. The Commission became only an F advisory or recommendatory body. The acceptance of the advice by the Government and corning to the conclusion that sale of 51 % or more of the equity of BALCO along with transfer of management would secure a better price than the sale of only 40% cannot be regarded as unwarranted,

- illegal or arbitrary. [559-G-H; 560-A-C]

G 6.1. It is not for this Court to consider whether the reserve price fixed by the Valuer at Rs. 514.5 crores was correct or not. What has to be seen in exercise of judicial review of administrative action is to examine whether proper procedure has been followed and whether the reserve price which was fixed is arbitrarily low and on the face of it, unacceptable. [560-F]

BALCO EMPLOYEES UNION (REGD.) v. U.0.1. 521 6.2. Assets including shares can be sold in a number of ways, i.e., by public auction, tenders or sealed offers or by negotiations. The exercise which was undertaken to appoint a Valuer and to get a value of this controlling interest of 51 % of the shares was presumably to arrive at the reserve price. What the assets will fetch, is ultimately reflected in the offer which is received.The bidders at the time offurnishing their bids did not know what will be the reserve price which had to be fixed. It is only after the receipt of the bids that the reserve price was made known. The perception in the mar- ket, therefore, clearly was that 51 % shares of BALCO along with its man- agement was not worth more than Rs. 550.5 crores. Under the circumstances, when the Union of India had decided to disinvest in BALCO by acepting a bid far in excess of the reserve price which was fixed by the Valuer, the said decision cannot, under any circumstances, be faulted. Whether the reserve price should have been 514.4 crores or more appears to be immaterial when the best price which has been offered for the sale of 51 % stake in BALCO after global advertisement was only Rs. 551.5 crores. There is no suggestion that there was any other company or Institution which had or could offer more than the said sum. When proper procedure has been followed and an offer Is made of a price more than the reserve price then there is no basis for this Court to conclude that the decision of the Government to accept the highest offer is in any way vitiated. [560-G-H; 561-A-E]

6.3. The offer of the highest bidder was more than the reserve price which was arrived at by a method which is well recognised. Further, valuation is a question of fact and Court will not interfere in matters uf valuation unless the methodology adopted is arbitrary. [573-C]

Duncans lndusrtries Ltd. v. State of U.P. and Ors., [2000] I SCC 633, F relied on.

7 .1. Transparency does not mean the conducting of Government busi- ness while sitting on the cross roads in public. Transparency would require that the manner in which decision is taken is made known. Persons who are to decide are not arbitrarily selected or appointed:The selection of the Glo- G bal Adviser and the Strategic Partner was through the process of issuance of global advertisement. It is the Global Adviser who selected the Valuer who was already on the list of valuers maintained by the Government. Whatever material was received was examined by a High Power Committee and the ultimate d~cision was taken by the Cabinet Committee on Disinvestment. To H

\

p. 522

A say that there has been lack of transparency, under these circumstances, is uncharitable and without any basis. [561-G-H; 562-A]

7.2. The facts show that fair, just and equitable procedure has been followed in carrying out this disinvestment. The allegations of lack of transparency or that the decision was taken in a hurry or there has been an B arbitrary exercise of power are without any basis. It is a matter of regret that the State Government has been making such allegations against the Union of India without any basis. This Court strongly deprecates snch unfounded averments made by an officer of the State. [573-A-B]

c 8. The giving of land to BALCO on lease was clearly permissible under the provisions of the M.P. Land Revenue Code, 1959 as it stood then. It is too late after 25 years when the last permission was granted to hold that becaues of the disinvestment, it must be presumed that there is a transfer of land to the non-tribal in the year 2001 even though the land continues to reamin with BALCO to whom it was originally transferred. D The change of management or in the shareholding does ot imply that there is transfer of land from one company to another. If the original grant of lease of land and permission to transfer in favour of BALCO between the years 1968 and 1972 was valid, then, it cannot now be contended that there has been another transfer of land with the Government having reduced its stake to 49%. Even if BALCO had been a non-public sector undertaking, the transfer of land to it was not in violation of the Land Revenue Code. The land was validly given to BALCO a number of years ago and today it is not open to tM State Government to take a summersault and challenge the correctness of its own action. Furthermore even with the change in management the land remaius with BALCO to whom it had been validly given on lease. [564-E-H]

Samatha v. State ()f A.P. and Ors., [1997] 8 SCC 191, distinguished.

9.1. Public Interest Litigation (PIL) is not a pill or a panacea for all wrongs. It was essentially meant to protect basic human rights of the weak and the disadvantaged and was a procedure which was innovated where a public spirited person files a petition in effect 011 behalf of such persons who on account of poverty, helplessness or economic and social disabilities could not approach the Court for relief. There have been, in recent times, increasing instances of abuse of PIL. [566-F] H

BALCO EMPLOYEES UNION (REGD.) v. U.0.1. 523 9.2. PIL was not meant to be a weapon to challenge the financial or A economic decisions which are taken by the Government in exercise of their administrative power. A person personally aggrieved hy any such decisii;n, which he regards as illegal, can impugn the same in a Court of law, but, a PIL at the behest of a stranger ought not to be entertained. Such a litiga· tion cannot perse be on behalf of the poor and the downtrodden, unless the B Court is satisfied that there has been violation of Article 21 and the persons adversely affected are unable to approach the Court. The decision to disinvest and the implementation thereof is purely an administrative decision relating to the economic policy of the State and challenge to the same at the instance of a busy-body cannot fall within the parameters of PIL. [571-G-H; 572-A] c 9.3. Judicial interference by way of PIL is available if there is injury to public because of dereliction of Constitutional or statutory obligations on the part of the government. Here it is not so and in the sphere of economic policy or reform the Court is not the appropriate forum. Every matter in D public interest or curiosity cannot be the subject matter of PIL.'Courts are not intended to and nor should they conduct the administration of the coun- try. 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 which is not so in the present case. [573-E-G] E 9.4. 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 Conrt is satisfied for good and valid reasons, that there will be irreparable and irretrievable damage an injunc- tion should be issued after hearing all the parties. Even then the Petitioner F 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. It is in public interest that there should be early disposal of cases. PIL should, therefore, be disposed of at the earliest as any delay will be contrary to public interest and thus become counter- productive. [574-A-C] G

S.P. Gupta v. Union qf India and Anr., [1981] Supp. SCC 87; Sachidanand Pandey and Anr. v. State of West Bengal and Ors., [1987] 2 SCC 295; Subhash Kumar v. State qf Bihar and Ors., [1991] 1 SCC 598; Janata Dal v. H.S. Chowdhary and Ors., [1992] 4 SCC 305; Raunaq International Ltd. v. I. V.R. H

'

524 SUPREME COURT REPORTS [200 I] SUPP. 5 S.C.R. A Construction Ltd. and Ors., [1999] l SCC 492 and Narmada Bachao Ando/an v. Union of India and Ors., [2000] 10 SCC 664, referred to.

10. With regard to the .writ petition filed nnder Article 32 of the Constitntion by BALCO challenging various show canse notices issned by the State Government anthorities for alleged breach of varions provisious B of Land Revenne Code and Mining Concession Rules, the company has adequate alternative remedy under the enactments under which the no- tices had b~en issued and, in appropriate case, can approach the High Court under Article 226 of the Constitution. [572-D]

C CIVIL ORIGINAL JURISDICTION : Transferred Case (C) No. 8 of 2001.

WITH

T.C. (C) Nos. 9 and IO of 2001 and W.P. (C) No. 194 of 2001.

D Soli J. Sorabjee, Attorney General, Harish N. Salve, Solicitor General, Dipankar P. Gupta, G.L. Sanghi, C.A. Sunc'!farn, P. Chidambararn, Anoop G. Chaudhary, Ranjit Kumar, Dr. A.M. Singhvi, Jaideep Gupta, Sanjay Sen, Rana S. Biswas, Ms. Sheetal Sharma, Sitesh Mukherjee, Ms. Indra Sawhney, S.S. Ray, Ms. Rakhi Ray, Ms. P.S. Shroff, Ms. Ritu Bhalla, Sidharth Datta, Manish E Singhvi, Ankur Talwar, Maninder Singh, Ms. Pratibha M. Singh, Ms. Kavita Wadia, Siddharth Goswami, Siddharth Chowdhury, B. V. Bairam Das, Rajiv K. Garg, Annam D.N. Rao, Ravindra Shrivastava, Ad vs. General for Chhattisgarh, Prakash Shrivastava, Piyush Dharmadhikari, Ms. Suparna Shrivastava, Harsh Verma, R.M. Sharma, Sanjay Parikh, R.R. Chandrachud, Arun Beriwal, Sudhir F Walia, Mahinder Singh Dahiya, Jaideep Gupta, Shahid Rizvi and Ms. Sarla Chandra for the appearing parties.

In-person for the Petitioner in T.C. (C) No. 9/2001.

The Judgment of the Court was delivered by G KIRPAL, J. The validity of the decision of the Union of India to disinvest and transfer 51 % shares of M/s Bharat Aluminium Company Limited (hereinafter referred to as 'BALCO') is the primary issue in these cases.

BALCO was incorporated in 1965 as a Government of India Undertak- H ing under the Companies Act, 1956. Prior to its disinvestment it had a paid-

,

BALCO EMPLOYEES UNION (REGO.) v. U.0.1. [KIRPAL, J.] 525 up share capital of Rs. 488.85 crores which was owned and controlled by the A Government of India. The company is engaged in the manufacture of alu- minium and had plants at Korba in the State of Chhattisgarh and Bidhanbag in the State of West Bengal. The Company has integrated aluminium manufac- turing plant for the manufacture and sale of aluminium metal including wire rods and semi-fabricated products. B

The Government of Madhya Pradesh vide its letter dated 18th March, 1968 wrote to BALCO stating that it proposed that land be granted to it on a 99 years lease subject to the terms and conditions contained therein. The letter envisaged giving on lease Government land on payment of premium of Rs. 200 per acre and, in addifon thereto also to provide tenure land which was to be c acquired and transferred on lease to BALCO on payment by it the actual cost of acquisition plus annual lease rent. Vide its letter dated 13th June, 1968 BALCO gave its assent to the proposal contained in the aforesaid letter of 18th March, 1968 for transfer of land to it. BALCO intimated by this letter that the total requirement of land would be about 1616 acres. Thereafter, in addition to the Government land which was transferred, the Government of Madhya Pradesh acquired land for BALCO under the provisions of the Land Acquisi- tion Act, 1894 on payment of compensation. The District Collector, Bilaspur also granted permission under Section 165(6) of the M.P. Land Revenue Code, 1959 for acquiring/transferring private land in favour of BALCO. As a result of the aforesaid, BALCO set up it's establishment on it's acquiring land from and with the help of the State Government.

Since 1990-91 successive Central Governments had been planning to disinvest some of the Public Sector Undertakings. In pursuance to the policy of disinvestment by a Resolution dated 23rd August, 1996 the Ministry of F Industry (Department of Public Enterprises) Government of India constituted a Public Sector Dis-investment Commission initially for a period of three years. The Resolution stated that this Commission was established in pursuance of the Common Minimum Programme of the United Front Government at the Centre. The Commission was an independent, non-statutory advisory body and was G headed by Shri G. V. Ramakrishna who was to be its Full-time Chairman. The Commission had four p]llt-time Members. Paras 3, 4 and 5 of the said Reso- Jution are as follows:-

"3. The broad terms of reference of the Commission are as follows:- H

p. 526

A I. To draw a comprehensive overall long term disinvestment pro- gramme within 5-10 years for the PSUs referred to it by the Core Group.

II. To determine the extent of disinvestment (total/partial indicating percentage) in each of the PSU. B III. To prioritise the PSUs referred to it by the Core Group in terms of the overall disinvestment programme.

IV. To recommend the preferred mode(s) of disinvestment (domestic capital markets/international capital markets/auction/private sale c to identified investors/any other) for each of the identified PS Us. Also to suggest an appropriate mix of the various alternatives taking into account the market conditions.

v. To recommend a mix between primary and secondary disinvestments taking into account Government's objective, the relevant PSUs funding requirement and the market conditions.

VI. To supervise the overall sale process and take decisions on instrument, pricing, timing, etc. as appropriate.

VIL To select the financial advisers for the specified PSUs to facilitate the disinvestment process.

VIII. To ensure that appropriate measures are taken during the disinvestment process to protect the interests of the affected employees including encouraging employees' participation in the sale process.

IX. To monitor the progress of disinvestment process and take nec- essary measures and report periodically to the Government on such progress.

X. To assist the Government to create public awareness of the G Government's disinvestment policies and programmes with a vi~w to developing a commitment by the people.

XL To give wjde publicity to the disinvestment proposals so as to ensure larger public participation in the shareholding of the enterprises; and

BALCO EMPLOYEES UNION (REGD.) v. U.0.1. [KIRPAL, J.] 527 XII. To advise the Government on possible capital restructuring of enterprises by marginal investments, if required, so as to ensure enhanced realisation through disinvestment.

4.The Disinvestment Commission will be advisory· body and the Government will take a final decision on the companies to bedisinveste<l and mode of disinvestment on the basis of advice given by the B Disinvestment Commission. The PSUs would implement the decision of the Government under the overall supervision of the Disinvcsnnent Commission.

5.The Commission while advising the Government on the above matters will also take into consideration the interests of stakeholders, workers, consumers and others having a stake in the relevant public sector undertakings."

It may here be noted that by a Resolution dated 12th January, 1998 the earlier Resolution of 23rd August, 1996 was partly modified with deletion of paras 3, 4 and 5 and by substitution of the same by the following:

"3(i) The Disinvestment Commission shall be an advisory body and its role and function would be to advise the Government on Disinvestment in those public sector units that are referred to it by the Government.

3(ii) The Commission shall also advise the Government on any other matter relating to disinvestment as may be specifically referred to it by the Government, and also carry out any other activities relating to disinvestment as may be assigned to it by the Govern- F ment.

3(iii) In making its recommendations, the Commission will also take into consideration the interests of workers, employees and others stake holders, in the public sector unit(s). G

3(iv) The final decision on the recommendations of the Disinvestment Conunission \.Viii vest with the Government."

According to the Union of India it laid down the broad procedures to be followed for processing the recommendations of the Disinvestment Com- H

p. 528

A mission. It was, inter alia, decided that:

i. the Ministry of Finance (now Department of Dis-investment) would process the recommendations of the Dis-Investment Com- mission, by inviting comments from the concerned administra- tive machinery; B ii. submit the recommendation to the Core Group of Secretaries for

iii. Dis-investment for consideration;

The recommendations of the Core Group of Secretaries would ... then be taken to the Cabinet for decision; c iv. It was also decided that the Core Group of Secretaries would be headed by the Cabinet Secretary and its permanent members would be Finance Secretary, Revenue Secretary, Expenditure Secretary, Secretary Department of Public Enterprises, Secretary D Planning Commission and Chief Economic Advisor, Ministry of Finance, and

v. to implement the decisions, an Inter-Ministerial Group headed by the Secretary/Joint Secretary of the Administrative Ministry and consisting of Joint Secretaries of Department of Economic Af- E fairs, Department of Public Enterprises, alongwith the Chairman and Managing Director of the Companies as Members and Di- rector (Finance) of the company as the Convenor. In case of BALCO, the !MG consisted of Secretary level Officers and was headed by Secretary (Mines). F On 10th December, 1999 the Department of Disinvestment was set up and the responsibilities which were earlier assigned lo the Ministry of Finance have now been transferred to this Department.

The Disinvestment Commission in its 2nd Report submitted in April, G 1997 advi;ed the Government of India that BALCO needed to be privatised. The recorrunendation which.it made was that the Government may immediately disinvest its holding in the Company by offering a significant share of 40% of the equity to a strategic partner. The Report further advised that there should be an agreement with the selected strategic partner specifying that the Govern- H ment would within two years make a public offer in the domestic market for

• BALCO EMPLOYEES UNION (REGD.) v. U.0.1. [KIRPAL, J.] 529 further sale of shares to institutions, small investors and employees thereby A bringing down its holding to 26%. The Commission also recommended that there should be an on-going review of the situation and the Government may disinvest its balance equity of 26% in full in favour of investors in the domestic market at the appropriate time. The Commission had recommended the ap- pointment of a Financial Advisor to undertake a proper valuation of the com- B pany and to conduct the sale process. The Commission had categorised BALCO as a non-core group industry.

The Chairman of the Disinvestment Commission wrote a letter dated 12th June, 1998 to the Secretary, Min.istry of Mines, Government of India drawing the Government's attention to the recommendations of the Commis- c sion for sale of 40% of equity in BALCO and to bringing down of the Government holding to 26% within two years. This letter then referred to the 5th Report of the Commission wherein it had reviewed the question of strategic sale and had suggested that the Government may keep its shareholding below the level of investment being offered by the strategic buyer and its divesting some portion of equity to other entities. This letter noted that in these circum- stances, it may be difficult to get in a multilateral financial institution to act fast in laking up shares of BALCO. The Chairman of the Commission then recom- mended that "in keeping with the spirit of the recommendations qf the 5th Report, you may now kindly consider offering 51% or more to the strategic buyer along with tran~fer qf management. This sale will enable a smooth transaction with the participation qf more bidders and better price for the shares. This will also be in keeping with the current policy as announced by the FM in his recent budget speech".

The Cabinet Committee on Economic Affairs had, in the meantime, in F September 1997 granted approval for appointment of a technical and financial advisor, selected through a competitive process, for managing the strategic sale and restructuring of BALCO. Global advertisement was then issued inviting from interested parties Expression of Interest for selection as a Global Advisor. The advertisement was published in four financial papers in India and also in G 'The Economist', a renowned financial magazine published abroad. Eight Merchant Banks showed their interest in appointment of the Global Advisor. The lowest bid of Mis Jardiae Fleming Securities India Ltd. was accepted and approved by the Cabinet Committee on Disin~estment on 9th March, 1999. The Cabinet Committee on Disinvestment also approved the proposal of stra- H

p. 530

A tegic sale of 51 % equity in respect of BALCO.

The .decision of the Government to the aforesaid strategic sale was challenged by the BALCO Empioyees' Union by filing Writ Petition No. 2249 of 1999 in the High Court of Delhi. This petition was disposed of by the High Court vide its order dated 3rd August, 1999. B On 3rd March, 2000, the'Union Cabinet approved the Ministry of Mines' proposal to reduce the share capital of BALCO from Rs. 488.8 crores to Rs. 244.4 crores. This resulted in cash flow of Rs. 244.4 crores to the Union Government in the Financial Year 1999-2000. c A formal Agreement between Jardine Fleming, the Global Advisor and the Government of India was executed on 14th June, 2000. The scope of work of the Global Advisor, inter alia, included the development, updating and review of a list of potential buyers of the stake; preparing necessary documents; assisting the Government of India in sale negotiations with potential buyers and D to advise on the sale price; to coordinate and monitor the progress of the transaction until its completion.

Thereafter, on 16th June, 2000 the Global Advisor, on behalf of the Government of India, issued an advertisement calling for "Expression of ln- E terest" in leading journals and newspapers such as the Economist, London, the Mining Journal, London, the Economic Times, India, Business Standard, India and the Financial Express, India. The invitation was to Companies and Joint Ventures which may be interested in acquiring 51 % shares of the Government of India in BALCO. The last date for submitting the expression of interest was 30th June, 2000 and the interested companies were required to submit their F expression of interest together with their Audited Annual Reports and a profile describing their business and operations.

Eight companies submitted their Expression of Interest. These compa- nies were as follows: G "i. · Sterlite Industries (India) Ltd.

ii. Hindlaco Industries Ltd.

111. Tranex Holding Inc.

H iv. Indian Minerals Corporation Pie.

BALCO EMPLOYEES UNION (REGD.) v. U.0.1. [KIRPAL, J.] 531 v. VAW Aluminium AG, Germany A vi. ALCOA, USA

vii. Sibirsky, Russia

viii. MALCO" B Mis Jardine Fleming, Global Advisor made an analysis of the various " bids on the basis of the financial and technical capability, familiarity with India and overall credibility. Thereupon two companies, namely, Indian Minerals Corporation Pie. And Tranex Holding Inc. were rejected. The Inter-Ministerial Group (hereinafter referred to as !MG) set up by the Union of India, accepted C the expression of interest of six out of eight parties and it also decided that the bids of Sterlite and MALCO be treated as one. Thus there remained five prospective bidders but two, namely, VAW Aluminium AG, Germany and Sibirsky, Russia dropped out and the remaining three, namely, ALCOA, USA, Hindalco and Sterlite conducted due diligence (inspection) on BALCO be- D tween September to December, 2000.

The !MG considered the drafts of the Shareholders' Agreement and the Share Purchase Agreement and had discussions with three prospective bidders and ultimately the said drafts were finalised on I Ith January, 2001. E For the purpose of carrying out the asset valuation of BALCO, the Global Advisor short listed four parties from the list of Registered Government Valuers approved by the Income-Tax Department. On 18th January, 200 l, BALCO invited quotations from the four Registered Valuers, so short listed, and the quotation of Shri P.V. Rao was accepted. Shri P.V. Rao was a registered F valuer of immovable property and bis team mates were Government Registered Valuers authorised to value plant and machinery. They were assisted in the work of valuation by officers of the Indian Bureau of Mines for assessing the value of existing mines. Pending the receipt of the valuation report from Shri P.V. Rao, the Global Advisor on 8th February, 2001 requested the three bidders to submit their financial bids along with other necessary documents by ·15th G February, 2001, which was later extended by one day. On 14th February, 2001 Shri P.V. Rao submitted his asset valuation report to Mis Jardine Fleming.

On 15th February, 2001, an Evaluation Committee headed by the Addi- tional Secretary (Mines) was constituted: This Committee was required to fix H

p. 532

A the reserve price of 51 % equity of BALCO which was to be sold to the strategic party. The three contenders, namely, Alcoa, Hindalco and Sterlite Industries Ltd. submitted their sealed bids to the Secretary (Mines) and Secretary (Disinvestment) on 16th February, 2001. It is thereafter, that Mis Jardine Fleming presented its valuation report together with the asset valuation done B by Shri P.V. Rao to the Eva!Uation Committee to work out the reserve price.

The range of valuation of BALCO that emerged on various methodolo- gies was as follows:-

(i) Discounted Cash How -Rs. 651.2 994. 7 crores

c (ii) Comparables -Rs. 587 909 crores

(iii) Balance Sheet -Rs. 597.2 681.9 crores

Thus, the range of valuation by all these methods came between Rs. 587 and Rs. 995 crores for 100% of the equity. Ipso facto, for 51 % of the equity, the range of valuation came mil as Rs. 300 to Rs. 507 crores. The Evaluation Committee then deliberated on the various methodologie~ and concluded, as per the affidavit of the Union of India, that the most appropriate methodology for valuing the shares of a running business of BAI.CO would be the Dis- counted Cash Flow method. It decided to add a control premium of 25% on the base value of equity (although the Advisor had viewed that the premium should range between 10-15%) and then add the value of non-core assets to arrive at a valuation of Rs. 1008.6 crores for the company as a whole, 51 % of which amounts to Rs. 514.4 prores which was fixed as .the Reserve Price. According to the respondents,,the Evaluation Committee felt that Asset Valu- ation Report appeared to have over-valued the fixed assets of the company at F Rs. 1072.2 crores. The Committee further observed that the fixed asset valu- ation method was only a good indicator of the value that could be realised if the business was to be liquidated, rather than for valuing the business as a going concern. Furthermore, the asset valuation method did not take into account the liabilities and contingent liability that go with the business. G When the financial bids were opened, it was found that the bid of Sterlite Industries was the highest at Rs. 551.5 crores, the bid of Hindalco was Rs. 275 crores while ALCOA had opted .out. The report of the Evaluation Committee for acceptance of the bid which was higher than the reserve price was consid- H ered by the !MG which recommended the acceptance of the bid of Sterliie

BALCO EMPLOYEES UNION (REGD.) v. U.0.1. [KIRPAL, l.] 533 Industries to the core group of Secretaries. This core group in turn made its A recommendation to the Cabinet Committee on Disinvestment which on 21st February, 2001 approved/accepted the bid of Sterlite Industries at Rs. 551.5 crores. The Government's decision was communicated to Sterlite Industries on that date. The announcement of the decision to accept the bid of Sterlite Industries led to the initiation of legal proceedings challenging the said deci- B sion. On 23rd February, 2001, Dr. B.L. Wadhera filed Civil Writ Petition No . .. 1262 of 2001 in the Delhi High Court. This was followed by Writ Petition No. 1280 of 2001 filed by the employees of BALCO on 24th February, 2001 also in the High Court of Delhi. On that very date, i.e., on 24th February, 2001 another employee of BALCO, namely, Mr. Samund Singh Kanwar filed Civil Writ Petition No. 241 of 2001 in the High Court of Chhattisgarh. c While the aforesaid writ petitions were pending there was a Calling Attention Motion on Disinvestment with regard to BALCO in the Rajya Sabha. Discussions on the said motion took place in the Rajya Sabha on 27th February, 2001 and the matter was discussed in the Lok Sabha on 1st March, 2001. The 'D motion "that this House disapproves the proposed disinvestment of Bharat Aluminium Company Ltd." was defeated in the Lok Sabha by 239 votes to 119 votes. Soon thereafter on 2nd March, 200 I, Shareholders Agreement and Share Purchase Agreement between the Government of India and Sterlite Industries Limited were signed. Pursuant to the execution of sale; 51 % of the equity was E transferred to Sterlite Industries Limited and a cheque for Rs. 551.5 crores was received. It is not necessary to refer to the terms of the agreement in any great detail except to notice a few clauses which pertain to safeguarding the interest of the employees of the company. Clauses H and J of the preamble reads as follows: F "H. Subject to Clause 7.2, the Parties envision that all employees of the Company on the date hereof shall continue in the employ- ment of the Company.

J. The SP recognises that the Government in relation to its employ- ment policies follows certain principles for the benefit of the G members of the Scheduled Caste/Scheduled Tribes, physically handicapped persons and other socially disadvantaged catego- ries of the society. The SP shall use its best efforts to cause the Company to provide adequate job opportunities for such per- sons. Further, in the event of any reduction in the strength of the H

p. 534

A employees of the Company, the SP shall use its best efforts to ensure that the physically handicapped pers0ns are retrenched at the end."

Clause 7.2 which contains the Representations, Warranties and Cov- enants of Mis Sterlite Industries is as follows: B ''The SP represents and warrants to and covenants with each of the .. Government and the Company that:

(a) It has been duly incorporated or created and is validly subsisting and in good standing under the laws of the jurisdiction indicated c in the preamble to this Agreement;

(b) it has the corporate power and authority to enter into and perform its obligations under this Agreement;

D (c) this Agreement has been duly authorised, executed and delivered by it and constitutes a valid and binding obligation enforceable against it in accordance with its terms;

(d) it is not a party to, bound or affected by or subject to any indenture, mortgage, lease agreement, instrument, charter or by- E law provision, statute, regulation, judgment, decree or law which would be violated, contravened, breached by or under which default would occur or under which any payment or repayment would be accelerated as a result of the execution and delivery of this Agreement or the consummation of any of the transactions provided for in this Agreement.

(e) Notwithstanding anything to the contrary in this Agreement, it shall not retrench any part of the labour force of the Company for a period ~fone (!)year from the Closing Date other than any dismissal or termination ofemployees of the Company from their employment in accordance with the applicable staff regulations and standing orders of the Company or applicable Law; and

(f} Notwithstanding anything to the contrary in this Agreement, but subject to sub-clause (e) above, any restructuring of the labour force of the Company shall be implemented in the manner rec-

BALCO EMPLOYEES UNION (REGO.) i: U.0.1. [KIRPAL, J.] 535 ommended by the Board and in accordance with all applicable A Jaws.

(g) Notwithstanding anything to the contrary in this Agreement, but subject to sub-clause (e) above, in the event of any reduction of the strength of the Company's employees the SP shall ensure that the Company offers its employees, an option to voluntarily retire .B on terms that are not, in any manner, less favourable than the voluntary retirement scheme offered by the Company which is referred to in Schedule 7.4 of the Share Purchase Agreement; and

(h) It shall vote all the voting equity shares of the Company, directly or indirectly, held by it to ensure that all provisions of this Agreement, to the extent required, are incorporated in the Com- pany's articles of association."

With the filing of the writ petitions in the High Court of Delhi and in the High Court of Chhattisgarh, an application for transfer of the petitions was filed by the Union of India in this Court. After the notices were issued, the company received various notices from the authorities in Chhattisgarh for alleged breach of various provisions of the M.P. Land Revenue Code and the Mining Conces- sion Rules. Some of the notices were not only addressed to the company but also to individuals alleging violation of the provisions of the code and the rules as also encroachment having taken place on Government land by BALCO. This led to the filing of the Writ Petition No. 194 by BALCO in this Court, inter alia, challenging the validity "of the said notices. During the pendency of the writ petition, the workers of the company went on strike on 3rd March, 2001. Some interim orders were passed in the transfer petition and subsequently on F 9th May, 2001 the strike was called off. By Order dated 9th April, 2001, the writ petitions which were pending in the High Court of Delhi and Chhattisgarh were transferred to this Court being Transfer Case No. 8 of 2001 which pertains to the writ petition filed by BALCO Employees' Union; Transfer Case No. 9 of 2001 pertains to the writ petition filed by Dr. B.L. Wadhera in the Delhi High G Court and Transfer Case No. 10 of2001 is the writ petition filed by Mr. Sarnund Singh Kanwar in the High Court of Chhattisgarh.

On behalf of the BALCO Employees' Union, Shri Dipankar P. Gupta, learned senior counsel submilted that the workmen have been adversely af- fected by the decision of the Government of India to disinvest 51 % of the H

p. 536

A shares in BALCO in favour of a private party. He contended that before disinvestment, the entire paid-up capital of BALCO was owned and controlled by the Government of India and it's administrative control co-vested in the Ministry of Mines. BALCO was, therefore, a State within the meaning of Article 12 of the Constitution. Reliance for this was placed on Ajay Hasia and B Others v. i)halid Mujib Sehravardi and Others, [1981] 1 SCC 722; Central Inland Water Transport Corporation limited and Another v. Brojo Nath Ganguly and Another, [1986] 3 SCC 156. He also contended that by reason of disinvestment the workmen have lost their rights and protection under Articles 14 and 16 of the Constitution. This is an adverse civil consequence and, therefore, they had a right to be beard before and during the process of c disinvestment. The type of consultation with the workmen which was neces- sary, according to Shri Dipankar P. Gupta, was whether BALCO should go through the process of disinvestment; who should be the strategic partner; and how should the bid of the strategic partner be evaluated. Referring to the avennent of the Union of India to the effect that interest of the employees has been protected, Shri Dipankar P. Gupta, submitted that in fact there was no effective protection of the workmen's interest in the process of disinvestment. He further submitted that the workmen have reason to believe that apart from the sale of 51 % of the shares in favour of Sterlite Industries the Agreement postulates that balance 49% will also be sold to them with the result that when nonnally in such cases 5% of the shares are disinvested in favour of the employees the same would not happen in the present case. Reliance was placed on the decision of National Textile Workers' Union and Ors. v. P.R. Ramakrishnan and Ors., [1983] 1 SCC 228 and it was also contended that even though there may be no loss of jobs in the present case but the taking away of the right or protection of Articles 14 and 16 is the civil consequence and, therefore, the workmen have a right to be heard. It was submitted that such rights and benefits are both procedural as well as substantive. Procedural benefits and rights includes the right to approach High Court under Article 226 of the Constitution and this Court under Article 32 of the Constitution in the event of violation of any of their rights. This is a major advantage since it is a relatively swift method of redressal of grievances which would not be available to employees of private organisations. Instances were given of the substantive rights which flow from Articles 14 and 16 like, right to equality, equal pay for equal work, right to pension including the principle, that there can be no discrimination in the matter of granting or withboldirig of pension vide Bharat Petroleum (Erstwhile H Burmah Shell) Management Staff Pensioners v. Bharat Petroleum Corporation

BALCO EMPLOYEES UNION (REGD.) v. U.O.I. [KIRPAL, J.] 537 Ltd. and Ors., [ i 988] 3 sec page 32, right to inquiry and reasons before dismissal etc.

The aforesaid contentions of Shri Gupta were supported by Shri G.L. Sanghi and Shri Ranjit Kumar, senior counsel, appearing for some of the Unions who were intervenors in the writ petition filed by BALCO Employees' Union. He submitted that the workers should have been heard at different stages during the process of disinvestment, the manner in which views may be invited and evaluated by the Government; the method of evaluation; the factors to be taken into consideration and the choice of the strategic partner; the terms and conditions under which the strategic partner will take over the employment of the workers and the terms and conditions of the Share Holders Agreement C are the stages in which the workers should have been heard and consulted. It was submitted that the decision of the Delhi High Court of 3rd August, 1999 does not come in the way of these contentions being raised inasmuch as the petition at that time was regarded as premature and the order which was passed actually preserves the workers' rights to raise the contention in future. D Reiterating these contentions Shri Ravindra Shrivastava, learned Advo- cate General, Stale of Chhattisgarh submitted that the State docs not challenge the policy of disinvestment per se on principle as a measure of socio-economic reform and for industrial well being in the country. He, however, contended that the implementation of the policy of disinvestment, in the present case, has failed to evolve a comprehensive package of socio-economic and political reform and to structure the decision making process so as to achieve in a just, fair and reasonable manner, the ultimate goal of the policy and that the interest of the workers in the industrial sector cannot be undermined and, therefore, any decision which was likely to affect the interest of the workers and employees as a class as a whole cannot and ought not to be taken to the exclusion of such class, lest it may be counter productive. He contended that the Disinvestment Commission had recommended that some percentage of equity share may be offered to the workers to solicit their participation in the enterprise and which . would go a long way in proving the disinvestment plan meaningful and sue- cessful. In this regard, it was not shown from any material or record that the G

Government of India had at any stage addressed itself to this vital aspect of the disinvestment process or had taken into consideration the likely repercussions on the interest, right and status of the employees and workers. This non- consideration indicates that there has been an arbitrariness in not taking into H

p. 538

A consideration relevant facts in the decision making process. It is further con- tended that the impugned decision defeats the provisions of the M.P. Land Revenue Code and goes against the fundamental basis on which the land was acquired and allotted to the company.

Implicit in the submissions on behalf of the employees is the challenge · B to the decision to disinvest majority of the shares of BALCO in favour of Sterlite Industries Limited. The first question, therefore, which would arise for consideration, is whether such a decision is amenable to judicial review and if so within what parameters and to what extent.

C On behalf of the Union of India, the Attorney General submitted that since 1990-91 successive Governments have gone in for disinvestment. Disinvestment had become imperative both in the case of Centre and the States primarily for three reasons. Firstly, despite every effort the rate of returns of governmental enterprises had been woefully low, excluding the sectors in which government have a monopoly and for which they can, therefore, charge any price. The rate of return on central enterprises came to minus 4% while the cost at which the government borrows money is at the rate of 10 to 11 %. In the States out of 946 State level enterprises, about 241 were not working at all; about 551 were making losses and 100 were reported not to be submitting their accounts at all. Secondly, neither the Centre nor the States have resources to sustain enterprises that are not able to stand on their own in the new environment of intense competition. Thirdly, despite repeated etforts it was not possible to change the work culture of governmental enterprises. As a result, even the strongest among them have been sinking into increasing difficulties as the environment is more and more competitive and technological change has become faster.

In support, the Solicitor General submitted that the challenge to the decision to disinvest on the ground that it impairs public interest, or that it was without any need to disinvest, or that it was inconsistent with the decision of the Disinvestment Commission was untenable. G It was submitted by the learned Attorney General that the wisdom and advisability of economic policies of Government are not amenable to judicial review. It is not for Courts to consider the relative merits of different economic policies. Court is not the Forum for resolving the conflicting clauses regarding H the wisdom or advisability of policy. It will be appropriate to consider some

BALCO EMPLOYEES UNION (REGD.) v. U.0.1. [KIRPAL, J.] 539 relevant decisions of this Court in relation to judicial review of policy deci- A sions.

While consid~ring the validity of the Banking Companies (Acquisition and Transfer of Undertakings) Ordinance 1969, this Court in Rustom Cavasjee Cooper v. Union of India, [1970] 1 SCC 248 at page 294 observed as under:- B "It is again not for this Court to consider the relative merits of the different political theories or economic policies ..... This Court has the power to strike down a law on the ground of want of authority, but the Court will not sit in appeal over the policy of the Parliament in enacting a law.... " c Applying the analogy, just as the Court does not sit over the policy of the Parliament in emcting the law, similarly, it is not for this Court to examine whether the policy of this disinvestment is desirable or not. Dealing with the powers of the Court while considering the validity of the decision taken in the sale of certain plants and equipment of the Sindri Fertilizer Factory, which was D owned by a Public Sector Undertaking, to the highest tenderer, this Court in Fertilizer Corporation Kamgar Union (Regd.), Sindri and Ors. v. Union ~f India and Ors., [1981] 1 SCC 568 at page 584, while upholding the decision to sell, observed as follows :- E " .. We certainly agree that judicial interference with the administration cannot be meticulous in our Montesquien system of separation of powers. The Court cannot usurp or abdicate, and the parameters of judicial review must be clearly defined and never exceeded. If the Directorate of a Government company has acted fairly, even if it has faltered in its wisdom, the court cannot, as a super-auditor, take the F Board of Directors to task. This function is limited to testing whether the administrative action has been fair and free from the taint of unreasonableness and has substantially complied with the norms of procedure set for it by rules of public administration." G With regard to the question of the locus standi of the workmen, who feared large-scale retrenchment, to challenge the validity of action taken by the Company, it was observed at page 589 as follows :-

"If a citizen is no more than a wayfarer or officious intervener without any interest or concern beyond what belongs to any one of the 660 H

p. 540

A million people of this country, the door of the court will not be ajar for him. But, if he belongs to an organisation which has special interest in the subject matter, if he has some concern deeper than that of a busybody, he cannot be told off at the gates, although whether the issue raised by him is justiciable may still remain to be considered. I, B therefore, take the view that the present petition would clearly have been permissible under Article 226".

In State qf M.P. and Ors. v. Nandlal Jaiswal and Ors., [1986] 4 SCC 566 the change of the policy decision taken by the State of Madhya Pradesh to grant licence for construction of distilleries for manufacture and supply of country c liquor to existing contractors was challenged. Dealing with the power of the Court in considering the validity of policy decision relating to economic matters, it was observed at page 605 as follows :-

"But, while considering the applicability of Article 14 in such a case, we must bear in mind that, having regard to the nature of the trade or business, the Court would be slow to interfere with the policy laid down by the State Gavernment for grant of licences for manufacture and.sale of liquor. The Court would, in view of the inherently perni- cious nature of the commodity allow large measure of latitude to the State Government in determining its policy of regulating, manufacture and trade in liquor. Moreover, the grant of licences for manufacture and sale of liquor would essentially be a matter of economic policy where the Court would hesitate lo intervene and strike down what the State Government has done, unless it appears to be plainly arbitrary, irrational or mala fide. We had occasion to consider the scope of interference by the Court under Article 14 while dealing with laws relating to economic activities in R.K. Garg v. Union of India. We pointed out in that case that laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion, etc. We observed that the legislature should be allowed some play in the joints because it has to deal with complex problems which do not admit of solution through any doc- trinaire or strait-jacket formula and this is particularly true in case of legislation dealing with economic matters, where, having regard to the nature of the problems required to be dealt with, greater play in the joints has to be allowed to the legislature. We quoted with approval the

BALCO EMPLOYEES UNION (REGD.) v. U.O.I. [KIRPAL, J.] 541 following admonition given by Frankfurter, J. in Morey v. Dond. A

In the utilities, tax and economic regulation cases, there are good reasons for judicial self-restraint if not judicial deference to legislative judgement. The legislature after all has the affinnative responsibility. The Courts have only the power to destroy, not to reconstruct. When these are added to the complexity of economic regulation, the uncer- B tainty, the liability to error, the bewildering co~flict ~{the experts, and the number ~f times the judges have been overruled by events- self- /imitation can be seen to be the path to judicial wisdom and institu- tional prestige and stability. c What we said in that case in regard to legislation relating to economic matters must apply equally in regard to executive action in the field of economic activities, though the executive decision may not be placed on as high a pedestal as legislative judgement insofar as judicial deference is concerned. We must not forget that in complex economic D matters every decision is necessarily empiric and it is based on experi- mentation or what one may call 'trial' and error method' and, there- fore, its validity cannot be tested on any rigid 'a priori' considerations or on the application of any strait-jacket formula. The Court must while adjudging the constitutional validity of an executive decision relating to economic matters grant a certain measure of freedom or E 'play in the joints' to the executive. "The problem of government" as pointed out by the Supreme Court of the United States in Metropolis Theatre Co. v. State of Chicago

are practical ones and may justify, if they do not require, F rough accommodations, illogical, it may be, and unscientific. But even such criticism should not be hastily expressed. What is best is not discernible, the wisdom of any choice may be disputed or condemned. Mere errors of government are not subject to our judicial review. It is only its palpably arbitrary exercises which

- can be declared void.

The Government, as was said in Pennian Basin Area Rate cases, is entitled to make pragmatic adjustments which may be called for by G

particular circumstances. The Court cannot strike down a policy de- cision taken by the State Government merely because it feels that H

j•

p. 542

A another policy decision would have been fairer or wiser or more scientific or logical. The Court can interfere only if the policy decision is patently arbitrary, discriminatory or mala fide. It is against the background of these observations and keeping them in mind that we must now proceed to deal with the contention of the petitioners based B on Article 14 of the Constitution."

A policy decision of the Government whereby validity of contract en- tered into by Municipal Council with the private developer for construction of a commercial complex was i~pugned came up for consideration in G.B. Mahajan and Ors. v. Jalgaon Municipal Council and Ors., [1991] 3 SCC 91 C and it was observed at page 104 as follows :-

" ..The criticism of the project being 'unconventional' does not add to or advance the legal contention any further. The question is not whether it is unconventional by the standard of the extant practices, but whether there was something in the law rendering it impermissible. There is, no doubt, a degree of public accountability in all governmental enter- prises. But, the present question is one of the extent and scope of judicial review over such matters. With the expansion of the State's presence in the field of trade and commerce and of the range of economic and commercial enterprises of government and its instrumentalities there is an increasing dimension to governmental concern for stimulating efficiency, keeping costs down, improved management methods, prevention of time and cost overruns in projects, balancing of costs against time scales, quality control, cost-benefit ratios etc. In search of these values it might become necessary to adopt appropriate techniques of management of projects wi(h concomitant economic expediencies. These are essentially matters of economic policy which lack adjudicative disposition, unless they violate consti- tutional or legal limits on power o: have demonstrable pejorative environmental implications or amount to clear abuse of power. This

- again is the judicial recognition of administrator's right to trial and error, as long as both trial and error are bona fide and within the limits of authority ... "

To the same effect arc the observations of this Com1 in Peerless General Finance and Investment Co. limited and Anr. v. Reserve Bank qf India, [ 1992] H 2 sec 343 in which Kasliwal, J. observed at page 375 as follows :-

BALCO EMPLOYEES UNION (REGD.) v. U.0.1. [KIRPAL, J.) 543 "31. The function of the Court is to see that lawful authority is not abused but not to appropriate to itself the task entrusted to that author- ity. It is well settled that a public body invested with statutory powers must take care not to exceed or abuse its power. It must keep within the limits of the authority committed to it. It must act in good faith and it must act reasonably. Courts are not to interfere with economic policy which is the function of experts. It is not the function of the courts to sit in judgement over matters of economic policy and it must neces- sarily be left to the expert bodies. In such matters even experts can seriously and doubtlessly differ. Courts cannot be expected to decide them without even the aid of experts". c In Premium Granites and Anr. v. State of T.N. and Ors., (1994] 2 SCC 691 while considering the Court's powers in interfering with the policy deci- sion, it was observed at page 715 as under:-

"54. It is not the domain of the Court to embark upon unchartered D ocean of public policy in an exercise to consider as to whether the particular public policy is wise or a better, public policy can be evolved. Such exercise must be left to the discretion of the executive and legislative authorities as the case may be ... " E The validity of the decision of the Government to grant licence under the Telegraph Act 1885 to non-government companies for establishing, maintain- ing and working of telecommunication system of the country pursuant to Government policy of privatisation of Telecommunications was challenged in Delhi Science Forum and Ors. v. Union ~f India and Anr., [1996] 2 SCC 405. It had been contended that Telecommunications was a sensitive service which F should always be within the exclusive domain and control of the Central Government and under no situation should be parted with by way of grant of licence to non-government companies and private bodies. While rejecting this contention, it observed at page 412 that : G " ... The national policies in respect of economy, finance, communica- tions, trade, telecommunications and others have to be decided by Parliament and the representatives of the people on the floor of the Parliament can challenge and question any such policy adopted by the ruling Government..." H

p. 544

A The Court then referred to an earlier decision in the case of R. K. Garg v. Union of India and Ors., [1981] 4 SCC 675 where there was an unsuccessful. challenge to a law enacted by Parliament and held ·at page 413 as follows :-

"What has been said in respect of legislations is applicable even in B respect of policies which have been adopted by Parliament. They cannot be tested in Court of Law. The courts cannot express their opinion as to whether at a particular juncture or under a particular situation prevailing in the country any such national policy should have been adopted or riot. There may be views and views, opinions and c opinions which may be shared and believed by citizens of the country including the representatives of the people in Parliament. But that has to be sorted out in Parliament which has to approve such policies. Privatisation is a fundamental concept underlying the questions about the power to make economic decisions. What should be the role of the D State in the economic deve.lopment of the nation? How the resources of the country shall be used? How the goals fixed shall be attained? What are to be the safeguards to prevent the abuse of the economic power? What is the mechanism of accountability to ensu.re that the decision regarding privatisation is in public interest? All these ques- E tions have to be answered by a vigilant Parliament. Courts have their limitations - because these issu.es rest with the policy-makers for the nation. No direction can be given or is expected from the courts unless while implementing such policies, there is violation or infringement of any of the constitutional or statutory provision. The new Telecom policy was placed before Parliament and it shall be deemed that F . Parliament has approved th.e same. This Court cannot review and examine as to whether the said policy should have been adopted. Of course, wheiher there is any legal or constitutional bar in adopting such policy can certainly be examined by the Court".

G While considering the validity of the industrial policy of the State of Madhya Pradesh relating to the agreements entered into for supply of sal seeds for extracting oil in M.P. Oil Extraction and Anr. v. State of M.P. and Ors., [1997] 7 SCC 592, the Court at page 610 held as follows :-

H "41. After giving our careful consideration to the facts and circum-

BALCO EMPLOYEES UNION (REGD.) v. U.0.1. [KIRPAL, J.] 545 stances of the case and to the submissions made by the learned counsel for the parties, it appears to us that the Industrial Policy of 1979 which was subsequently revi~ed from time to time cannot be held to be arbitrary and based on no reason Whatsoever but founded on mere ipse dixit of the State Government of M.P. The executive authority of the State must be held lo be within its competence to frame a policy for the administration of the State. Unless the policy framed is absolutely capricious and; not being il~formed by any reason whatsoev~r, can be · clearly held to be arbitrary and founded on mere ipse dixit ·a.f th~ executive functionaries thereby offending Article 14 o.fthe Constitution or such policy offends other constitutional provisions or comes into conflict with any statutory provision, the Court cannoi and should not c outstep its limit and tinker with the policy decision o.f the executive functionary o.fthe State. This Court, in no uncertain terms; has sounded a note of caution by indicating that policy decision is in the domain of the executive authority of the Stale and the Court should not embark on the unchartered ocean of public policy and should not question the efficacy or otherwise of such policy so long the same does not offend any provision of the stature or the Constitution of_ India. The su- premacy of each of the three organs of the ·state i.e. legislature, executive and judiciary in their respective fields of operation needs to be emphasised. The power of judicial review of the executive and legislative action must be kept within the bounds of constitutional scheme so that there may not be any occasion to entertain misgivings about the role of judiciary in outstepping its limit by unwarranted judicial activism being very often talked of in these days. The demo- cratic set-up to which the polity is so d.eeply conunitled cannot func- F lion properly unless each of the three organs appreciate. the need for mutual respect and supremacy in their respective fields."

(emphasis added)

The validity of <he change of Government policy in regard to the reim- G bursement of medical expenses to its serv· ng and retired employees came up for consideration before this Court in Stat< of Punjab and Ors. v. Ram Lubhaya Baglia and Ors .. [1998] 4 SCC 117. The earlier policy upholding the reim- bursement for treatment in a private hospital had been upheld by this Court but the State of Punjab changed this policy whereby reimbursement of medical H

546 SUPREME COURT REPORTS [2001] SUPP. 5 S.C..R. A expenses incurred in a private hospital was only possible if such treatment was not available in any government hospital. Dealing with the validity of the new policy, the Court observed at page 129 as follows :-

"25. Now we revert to the last submission, whether the new State policy is justified in not reimbursing an employee, his full medical B expenses incurred on such treatment, if incurred in any hospital in India not being a government hospital in Punjab. Question is whether the new policy which is restricted by the financial constraints of the State to the rates in AI!MS would be in violation of Article 21 of the Constitution of India. So far as questioning the validity of governmen- c tal policy is concerned in our view it is not normally within the domain of any court, to weigh the pros and cons of the policy or to scrutinize it and test the degree of its beneficial or equitable disposition for the purpose of varying, modifying or annulling it, based on howsoever sound and good reasoning, except where it is arbitrary or violative of any constitutional, statutory or any other provision of law. When Government forms its policy, it is based on a number of circumstances on facts, law including constraints based on its resources. It is also • based on expert opinion. It would be dangerous if court is asked to test the utility, beneficial effect of the policy or its appraisal based on facts set out on affidavits. The Court would dissuade itself from entering into this realm which belongs to the executive. It is within this matrix that it is to be seen whether the new policy violates Article 21 when it restricts reimbursement on account of its financial constraint-;."

F The reluctance of the Court to judicially examine the matters of eco- nomic policy was again emphasised in Bhavesh D. Parish and Ors. v. Union qf India and Anr., [2000] 5 SCC 471 and while examining the validity of Section 45-S of the Reserve Bank of India Act 1934, it was held as follows:-

"26. The services rendered by certain informal sectors of the Indian G economy could not be belittled. However, in the path of economic progress, if the informal system was sought to be replaced by a more organised system, capable o.f better regulation and discipline, then this was an economic philosophy reflected by the legislation in question. Such a philosophy might have its merits and demerits. But these were matters of economic policy. They are best left to the wisdom of the

BALCO EMPLOYEES UNION (REGO.) v. U.0.1. [KIRPAL, J.] 547 legislature and in policy matters the accepted principle is that the courts should not interfere. Moreover in the context of the changed

- economic scenario the expertise of people dealing with the subject should not be lightly interfered with. The consequences of such inter- diction can have large-scale ramifications and can put the clock back for a number of years. The process of rationalisation of the infirmities in the economy can be put in serious jeopardy and, therefore, it is necessary that while dealing with economic legislations, this Court, while not jettisoning its jurisdiction to curb arbitrary action or uncon- stitutional legislation, should interfere only in those few cases where the view reflected in the legislation is not possible to be taken at all". c In Nannada Bachao Ando/an v. Union of India and Ors., [2000) 10 SCC 664, there was a challenge to the validity of the establishment of a large dam. It was held by the majority at page 762 as follows :-

"229. It is now well settled that the Courts, in the exercise of their D jurisdiction, will not transgress into the field of policy decision. Whether to have an infrastructural project or not and what is the type of project to be undertaken and how it has to be executed, are part of policy- making process and the Courts are ill-equipped to adjudicate on a policy decision so undertaken. The Court, no doubt, has a duty to see that in the undertaking of a decision, no law is violated and people's E fundamental rights are not transgressed upon except to the extent permissible under the Constitution .. "

It is evident from the above that it is neither within the domain of the Courts nor the scope of the judicial review to embark upon an enquiry as to F whether a particular public policy is wise or whether better public policy can be evolved. Nor are our Courts inclined to strike down a policy at the behest of a petitioner merely because it has been urged that a different policy would have been fairer or wiser or more scientific or more logical.

Process of disinvestment is a policy decision involving complex eco- G nomic factors. The Courts have consistently refrained from interfering with economic decisions as it has been recognised that economic expediencies lack adjudicative disposition and unless the economic decision, based on economic expediencies, is demonstrated to be so violative of constitutional or legal limits on power or so abhorrent to reason, that the Courts would decline to interfere. H

p. 548

A Jn matters relating to eeonomic issues, the Government has, while taking a decision, right to "trial and error" as long as both trial and error are ar:d within limits of authority. There is no case made out by the petitioner that the decision .to disinvest in BALCO is in any way capricious, arbitrary, illegal or unin- formed. Even though the workers may have interest in t.!ie manner in which the .B Company is conducting its business, inasmuch as its policy decision may have an impact on the workers' rights, nevertheless.it is an incidence of service for an employee to accept a.decision. of the employer which has been honestly •'-

taken and which is not contrary to law. Even a government servant, havirig the pr<)tection of not only Articles 14.and 16 of the Constitution but also of Article 311, has no absolute right to remain in service. For example, apart from cases c of disciplinary action, the se:vices of government servants can be terminated if posts are abolished. If such employee cannot make a grievance based on part ·III of the Constitution' or Article 311 then it cannot stand to reason that like the petiti?ncrs, non-government employees working in a company which by reason of judicial pronouncement may be regarded as a State for the purpose of part' III of the Constitution, can claim a superior or a better right than a government servant and impugn it's change of status. In taking of a policy decision in econo1nic matters at Jength, the principles of natural justice have no role to play. While it is expected of a responsible employer to take all aspects in_to consideration including welfare of the labour before taking any policy decision that, by itself, will not entitle the employees to demand a right of ·hearing or consultation prior to the taking of the decision.

·Merely because the workmen may have protection of Articles 14 and 16 of the Constitution, by regarding BALCO as a State, it does not mean that the ·erstwhile sole shareholder viz., Government had to give the workers prior F ·notice of hearing before deciding to disinvest. There is no principle of natural justice which requires prior notice and hearing to persons who are generally affected as· a class by an economic policy decision of the Government. If the abolition of a post pursuant to a policy decision does not attract the provisions of Article 311 of the Constitution as held in State ~f Haryana v. Shri Des Raj G Sangar and Anr., [ 1976] 2 SCC 844, on the same parity of reasoning, the policy ofdisinvest~ent cannot be faulted if as a result thereof the employees lose their rights or protection under Articles 14 and 16 of the Constitution. In other words, the existence of rights of protection under Articles 14 and 16 of the Constitution cannot possibly have the effect of vetoing the Government's right to disinvest. Nor can the employees claim a right of continuous consultation

BALCO EMPLOYEES UNION (REGD.) v. U.0.1. [KIRPAL, J.] 549 at different stages of the disinvestment process. If the disinvestment process is gone through without contravening any law, then the normal consequences as a result of disinvestment must follow.

The Government could have run the industry departmentally or in any other form. When it chooses to run an industry by forming a company and it becomes its shareholder then under the provisions of the Companies Act as a shareholder, it would have a right to transfer its shares. When persons seek and get employment with such a company registered under the.Companies Act, it must be presumed that they accept the right of the directors and the sharehold- ers to conduct the affairs of the company in accordance with law and at the same time they can exercise the right to sell their shares. c A similar question came up for consideration before Madras High C9urt. In Southern Structurals Limited, the State of Tamil Nadu had acquired over 99% of shares and the company had become a government company. It had incurred losses over the years and the government then decided to disinvest D from the company. This decision was challenged by the Comp.any's employees by filing a Writ Petition in the Madras 1-Iigh Court. It was cont~nded on their behalf that in the event of disinvestment being effected, the employees of the State Government would lose valuable rights including the protection of Ar- ticles 14 and 16 of the Constitution and a right to approach the Court under E Articles 32 and 226. Repelling this contention in Southern Structurals Stqff Union v. Management of Southern Structurals Ltd. and Anr., [1994] 81 Comp. Cases at page 389, the High Court held asfollows :-

"The sub111ission that in order to enable the e1nployees to invoke Article.14 or Article 16 and to approach the High Court or the Supreme F Court directly by invoking Article 226 or Article 32, the Government is bound to retain its ownership of the bulk of the shares in this company forever is devoid qf any force.

The protection qf Article 14 is available to all and is not co~fined G to employees qf the State. The limitations placed by Article 16 on the State_ lvith regard to en1ploy111en1 um/er the State is not intended to compel the State to provide employment under it to all who seek such e111ploynzenl or retain all persons presently in its service in order to enable such persons to claim the ben~fit qf Article 16. H

p. 550

A Employment under the State is not a precondition for approaching the High Court or the Supreme Court. All industrial workers have a right to approach the Labour Court or Industrial Tribunals for adju- dication qf their rights subject to the limitations contained in the Industrial Disputes Act. Like all citizens industrial workers also have B the right to approach civil courts for redressal of their wrongs. The decisions rendered by the civil, labour and industrial courts or tribu- nals are open to challenge b~fore the High Court and the Supreme ... Court in appropriate proceedings. Actions of the Govemmeni or other authorities performing any public duty are amenable to correction in proceedings under Article 226. By reason u.f the disinvestment, em- c ployees do not lose their right to seek redressal through courts.for any wrongs done to them.

The employees have no ves1ed right in the employer company continuing to be a government company or "other authority''.for the purpose of Article 12 of the Constitution of India. Aparlfrom the.fact lhal the very status claimed by the employees in this case is a.fortuitous • occurrence with the etnployees having commenced work under a private employer and while on the verge of losing employment, being rescued by the State taking over the company, the employees cannot claim any righl lo decide as to who should own the shares of the company. The State which invested of its own volition, rnn equally well disinvest. So long as the State holds the controlling interest or the whole qf the shareholding, employees may claim lhe status qf employ- ees of a govem1nent co1npany or ''other authority" under Article 12 of the Constitution. The status so conferred on the employees does not prevent the Goven11nent froni disinvesting; nor <loes it make the con- sent ~f the en1ployees a necessary precondition .for disinvest111ent.

Public interest is the paramount consideration, and ~fin the public interest the Govenunent thought it fit to take over a sick company to preserve the productive unit and the jobs qf those employed therein, the govenunent can, in the public interest, with a vie~v to reducing the continuing drain on its lin1ited resources, or \1-'ith a view to raising .funds .for its priority 1Ve(f..rzre or developtnental projects, or even as a measure qf mobilisin11 the funds needed for running the government, disinvesl from the public sector companies. Article 12 of the Consti-

BALCO EMPLOYEES UNION (REGD.) v. U.0.1. [KIRPAL, J.] 551 tution does not place any embargo on an instrumentality of the State A or "other authority" from changing its character".

The aforesaid observations, in our opinion, enunciates the legal position correctly. The policies of the Government ought not to remain static. With the change in economic climate, the wisdom and the manner for the Government B to run commercial ventures may require reconsideration. What may have been in the public interest at a point of time may no longer be so. The Government has taken a policy decision that it is in public interest to disinvest in BALCO. An elaborate process has been undergone and majority shares sold. It cannot be said that public funds have been frittered away. In this process, the change in the character of the company cannot be validly impugned. While it was a C policy decision to start BALCO as a company owned by the Government, it is as a change of policy that disinvestment has now taken place. If the initial decision could not be validly challenged on the same parity of reasoning, the decision to disinvest also cannot be impugned without showing that it is against any law or mala .fide. D

Even though, the employees have no right to be heard before the decision to disinvest takes place nevertheless it is the case of the Respondent that the workers had been fully informed about the process of disinvestment through an ongoing dialogue. In this connection, it is pertinent to note that the BALCO Employees Union had filed Writ Petition No. 2249 of 1999 against the Union E of India before the Delhi High Court in relation to proposed disinvestment wherein the following order was passed on 3rd August, 1999 :-

"It is stated by Dr. Singhvi, learned counsel, on instructions from Mr. Madan Lal, President of the Petitioner that challenge to the policy F of disinvestment in Respondent No. 5 company is not pressed. It is .further stated that whenever the .final decision is to be taken by the Respondents q[fel'ling the interests of the workers, the same be inti- n1ated w;th nvn weeks' advance notice to the Petitioner:-; by the Re- spondents. G As .far as the protection o.f the interests o,f the workers is con- cerned, the relie.f being premature c~inno{ be entertained and the petition to this extent would be liable lo be rejected.

Mr. Rawal, learned Additional Solicitor General states that if any H

p. 552