Bombay High Court Dismisses Four Petitions Against Disinvestment Of Government’s Share In BPCL

The Bombay high court (HC) on Thursday upheld the November 20, 2019, decision of the cabinet committee of economic affairs (CCEA), headed by the prime minister, to grant in-principle approval for disinvestment of government share in Bharat Petroleum Corporation Limited (BPCL) – India’s second-largest public sector oil and gas company. The division bench of justice SC Gupte and justice Madhav Jamdar dismissed separate petitions filed by the Federation of all Maharashtra Petrol Dealers Association, Bharat Petroleum Corporation Ltd (Refinery) Employees Union, Petroleum Employees Union and some individuals, questioning the validity of the in-principle approval.

The petitioners primarily contended that the original business and undertaking of BPCL’s predecessor, Burmah Shell – acquired through an Act of parliament and vested in BPCL by a notification in pursuance of that Act – cannot be disinvested without specific legislative approval from the Parliament. Relying on the Supreme Court (SC) judgment for public interest litigation, they argued that as the original acquisition is under an Act of Parliament, it was not legally permissible for the central government to disinvest its shareholding in BPCL without legislative mandate of the Parliament.

They also claimed that the Burmah Shell Acquisition Repelling Act does not amount to such parliamentary approval for the disinvestment. Their counsel, senior advocate Navroz Seervai, submitted that an informed parliamentary approval to disinvestment had to precede any strategic disinvestment by the Union of its controlling stake in the company.
The HC, however, said that the Apex court judgment did not support the case of the petitioners. The bench said what the SC held was that if an undertaking was acquired through an Act of Parliament, it cannot be disinvested so long as the law remained on statute book. The SC said that for such disinvestment, the law would have to be repealed or suitably amended to enable the Centre to disinvest its controlling stake or change the public character of the company.

The HC also said that the parliament had repealed the Burmah Shell Acquisition Act in 2016. “Absent the statute of acquisition, there is no legal impediment for disinvestment by the Union of its controlling stake in BPCL,” said the bench. The HC also noted that the decision had undergone an elaborate process of consideration at the hands of experts and key government functionaries.

The court said the policy decision of acquiring Burmah Shell was based on the economic theory and socio-economic policy prevailing at the time. The central government then considered it to be in public interest, the court said, adding that those considerations have made way for new considerations, informed by a new economic theory and socio-economic policy of efficiency improvement and consumer benefit by making of the current oligopoly of petroleum producers and marketers competitive through a private or non-government player. “The present governing dispensation is well within its powers to take such decision,” said the bench, approving the in-principle approval.

The HC noted that Niti Aayog identified BPCL as an ideal undertaking for disinvestment. Niti Aayog recommendations were deliberated at the Core Group of Secretaries on Disinvestment (CGD). The CGD, after taking into account various inputs from expert bodies and different ministries, recommended strategic disinvestment in BPCL, and thereafter the CCEA accorded in-principle approval for the disinvestment. “All this can only lead to conclusion that the policy decision is an informed decision; it cannot be termed as an arbitrary or capricious decision; and it does not offend any constitutional or statutory provisions,” HC concluded.