TaxTMI 
TaxTMI 
2001 (12) TMI 808
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.... JUDGMENT Kirpal, J.-The validity of the decision of the Union of India to disinvest and transfer 51 per cent shares of Bharat Aluminium Co. Ltd. ('BALCO') is the primary issue in these cases. 2. BALCO was incorporated in 1965 as a Government of India Undertaking under the Companies Act, 1956. Prior to its disinvestment it had a paid-up share capital of Rs. 488.85 crores which was owned and controlled by the Government of India. The company is engaged in the manufacture of aluminium and had plants at Korba in the State of Chhattisgarh and Bidhanbag in the State of West Bengal. The company has integrated aluminium manufacturing plant for the manufacture and sale of aluminium metal including wire rods and semi-fabricated products. 3. The Government of Madhya Pradesh vide its letter dated 18-3-1968 wrote to BALCO stating that it proposed that land be granted to it on 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 addition thereto also to provide tenure land which was to be acquired and transferred on lease to BALCO on payment by it the actual cost of a....
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....ctive, 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. VII.To select the financial advisers for the specified PSUs to facilitate the disinvestment process. VIII.To ensure that appropriate measures are taken during the dis-investment 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 necessary measures and report periodically to the Government on such progress. X.To assist the Government to create public awareness of the Government's disinvestment policies and programmes with a view to developing a commitment by the people. XI.To give wide publicity to the disinvestment proposals so as to ensure larger public participation in the shareholding of the enterprises; and 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 th....
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....e; 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 Affairs, Department of Public Enterprises, along with the Chairman and Managing Director of the Companies as Members and Director (Finance) of the company as the Convenor. In case of BALCO, the JMG consisted of Secretary Level Officers and was headed by Secretary (Mines). On 10-12-1999 the Department of Disinvestment was set up and the responsibilities which were earlier assigned to the Ministry of Finance have now been transferred to this Department. 7. The Disinvestment Commission in its Second Report submitted in April, 1997 advised the Government of India that BALCO needed to be privatised. The recommendation which it made was that the Government may immediately disinvest its holding in the Company by offering a significant share of 40 per cent 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 Government would within two years make a public offer in the domestic market for....
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....ir interest in appointment of the Global Advisor. The lowest bid of Jardine Fleming Securities India Ltd. was accepted and approved by the Cabinet Committee on Disinvestment on 9-3-1999. The Cabinet Committee on Disinvestment also approved the proposal of strategic sale of 51 per cent equity in respect of BALCO. 10. The decision of the Government to the aforesaid strategic sale was challenged by the BALCO Employees' 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 3-8-1999. 11. On 3-3-2000, 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. 12. A formal Agreement between Jardine Fleming the Global Advisor and the Government of India was executed on 14-6-2000. 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 po....
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....gistered Valuers, so short listed, and the quotation of Shri P.V. Rao was accepted. Shri P.V. Rao was a registered valuer of immovable property and his 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 8-2-2001 requested the three bidders to submit their financial bids along with other necessary documents by 15-2-2001, which was later extended by one day. On 14-2-2001 Shri P.V. Rao submitted his asset valuation report to Jardine Fleming. 18. On 15-2-2001, an Evaluation Committee headed by the Additional Secretary (Mines) was constituted. This Committee was required to fix the reserve price of 51 per cent 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 16-2-2001. It is thereafter, that Jardine Fleming presented its valuation report together with the asset valuat....
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....nnouncement of the decision to accept the bid of Sterlite Industries led to the initiation of legal proceedings challenging the said decision. On 23-2-2001, 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 24-2-2001 also in the High Court of Delhi. On that very date, i.e., on 24-2-2001 another employee of BALCO, namely, Mr. Samund Singh Kanwar filed civil writ petition No. 241 of 2001 in the High Court of Chhattisgarh. 20. 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 27-2-2001 and the matter was discussed in the Lok Sabha on 1-3-2001. The 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 2-3-2001, Shareholders Agreement and Share Purchase Agreement between the Government of India and Sterlite Industries Limited were signed. Pursuant to the execution of sale, 51 per cent of the e....
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.... Closing Date other than any dismissal or termination of employees 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 recommended by the Board and in accordance with all applicable laws; (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 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 Company's articles of association." 22. With the filing of the writ pet....
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....pe of consultation with the workmen which was necessary, 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 averment 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 normally 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 v. P.R. Ramakrishnan [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 h....
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....e 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 successful. In this regard, it was not shown from any material or record that the 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 consideration relevant facts in the decision ....
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....nflicting clauses regarding the wisdom or advisability of policy. It will be appropriate to consider some relevant decisions of this Court in relation to judicial review of policy decisions. 30. While considering the validity of the Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, 1969, this Court in Rustom Cavasje Cooper v. Union of India [1970] 1 SCC 248 observed as under :- "...It is against 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...." (p. 294) Applying the analogy, just as the Court does not sit over the policy of the Parliament in enacting 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 owned by a Public Sector Undertaking, to the highest tenderer, this Cour....
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....re 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 to 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 doctrinaire 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 L....
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....he 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 on Article 14 of the Constitution." (p. 605) 32. A policy decision of the Government whereby validity of contract entered into by Municipal Council with the private developer for construction of a commercial complex was impugned came up for consideration in G.B. Mahajan v. Jalgaon Municipal Council [1991] 3 SCC 91 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 enterprises. 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 comm....
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....rnment to grant licence under the Telegraph Act, 1885 to non-government companies for establishing, maintaining and working of telecommunication system of the country pursuant to Government policy of privatisation of Telecommunications was challenged in Delhi Science Forum v. Union of India [1996] 2 SCC 405. It had been contended that Telecommunications was a sensitive service which 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 : "...The national policies in respect of economy, finance, communications, 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. . . ." 35. The Court then referred to an earlier decision in the case of R.K. Garg v. Union of India [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 ....
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....e executive authority of the State must be held to be within its competence to frame a policy for the administration of the State. Unless the policy framed is absolutely capricious and, not being informed by any reason whatsoever, can be clearly held to be arbitrary and founded on mere ipse dixit of the executive functionaries thereby offending Article 14 of the Constitution or such policy offends other constitutional provisions or comes into conflict with any statutory provision, the Court cannot and should not outstep its limit and tinker with the policy decision of the executive functionary of the 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 State 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 supremacy 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 ....
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....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 constraints." 37. The reluctance of the Court to judicially examine the matters of economic policy was again emphasised in Bhavesh D. Parish v. Union of India [2000] 5 SCC 471 and while examining the validity of section 45S of the Reserve Bank of India Act, 1934, it was held as follows:- "26. The services rendered by certain informal sectors of the Indian 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 of 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 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 ....
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....as long as both trial and error are bona fide and within limits of authority. There is no case made out by the petitioner that the decisions to disinvest in BALCO is in any way capricious, arbitrary, illegal or uninformed. Even though the workers may have interest in the manner in which the 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, 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. For example, apart from cases of disciplinary action, the services 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 petitioners, 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....
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....ation before Madras High Court. 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 from the company. This decision was challenged by the Company's employees by filing a Writ Petition in the Madras High Court. It was contended 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 Articles 14 and 16 of the Constitution and a right to approach the Court under Articles 32 and 226. Repelling this contention in Southern Structurals Staff Union v. Management of Southern Structurals Ltd. [1994] 81 Comp. Cas. 389 (Mad.), the High Court held as follows : "The submission that in order to enable the employees to invoke Article 14 or Article 16 and to approach the High Court or the Supreme 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 of any force. The protection of Article 14 is available to all and is ....
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....ployed therein, the government can, in the public interest, with a view to reducing the continuing drain on its limited resources, or with a view to raising funds for its priority welfare or developmental projects, or even as a measure of mobilising the funds needed for running the government, disinvest from the public sector companies. Article 12 of the Constitution does not place any embargo on an instrumentality of the State or "other authority" from changing its character." 43. The aforesaid observations, in our opinions, 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 to run commercial ventures may require reconsi-deration. 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 policy decision t....
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....the Government which were considered by it before finalising of various documents. That there was a dialogue between the Government and representatives of the workers which is evident from the copy of minutes of the meetings held on 14-2-2001 between the union leaders and officers of the companies and the Government. The minutes of the meeting with leaders of six trade unions, who had taken part in the discussion, disclose that, in principle, the Trade Unions were not against disinvestment but their interest should be sufficiently safeguarded. 46. We find that in the shareholders agreement between the Union of India and the strategic partner, it is provided that there would be no retrenchment of any worker in the first year after the closing date and thereafter restructuring of the labour force, if any, would be implemented in a manner recommended by the Board of Directors of the company. The Shareholders Agreement further mandates that in the event 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 favourable than the Voluntary Retirement ....
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....Company or applicable Law; and Clause 7.2 (f) Subject to the sub-clause (e) any restructuring of the labour force of the company shall be implemented in the manner recommended by the Board and in accordance with all applicable laws. The SP in the event of any reduction of the strength of its employees shall, ensure that the Company offers its employees an option to voluntarily retire on terms that are not, in any manner, less favourable than the voluntary retirement scheme offered by the company on the date of this agreement;" It may be mentioned that as per the provisions contained in the Industrial Disputes Act, BALCO will remain an industrial establishment even after the disinvestment and all the provisions of Industrial Disputes Act will automatically apply to BALCO. In an organised sector, the issues of job security, wage structure, perks, welfare facilities, etc., of the workmen are governed by bipartite/tripartite agreements. These agreements are in the nature of "settlement" under the Industrial Disputes Act. Even after the disinvestment, the BALCO management will be required to enter into bipartite/tripartite agreements with the workmen through unions, and, the te....
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....ose its plans for investment/modernisation of BALCO after disinvestment. As a matter of fact, at the time of submitting financial bids the prospective buyers are expected to submit the business plan as well. But perhaps in such commercial ventures, given the changing market conditions, the business plan submitted by prospective buyers may not be enforceable under law. The trade unions desire that all listed demands should be accepted and put in the form of a written agreement between the Government and the representatives of recognised unions before finalising any agreement with the prospective buyers. In fact, the Government and BALCO are two different legal entities. The Government is disinvesting its 51% equity in the BALCO. Under law, no enforceable agreement may be entered between the Government and the workmen of BALCO as any such agreement will not have force of law. In order that an agreement has to force of law, it should be a written agreement between employer and workmen. The Government is not the employer of the workmen employed in BALCO. As such, any such agreement is neither desirable nor necessary and not enforceable." From the aforesaid recital of facts, it is....
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.... of the shareholders and creditors but also amongst other things, the interests of the workers. The workers must have an opportunity of being heard for projecting and safeguarding their interests before winding up Order is passed by the Court. It was contended that similarly before a policy decision is taken, and also in the execution thereof, as the interests of the workers is going to be affected, the petitioning workers herein have a right to be heard. There can be no doubt that in judicial proceedings where rights are likely to be affected, principles of natural justice would require the Court to give a hearing to the party against whom an adverse or unfavourable Order may be passed. It was in relation to the winding up proceedings which were pending before a Court that this Court in National Textiles Workers Union case held that they had a right to be heard. The position, in the present case, is different. No judicial or quasi-judicial functions are exercised by the Government when it decides, as a matter of policy, to disinvest shares in a Public Sector Undertaking. While it may be fair and sensible to consult the workers in a situation of change of management, there is, howe....
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....vestment of BALCO is concerned, that is a matter between the State Government and the Union of India and any grievance on that score cannot be raised by the State against the Government of India in these proceedings initiated by the workmen. However, it is not possible to believe that during the entire process of disinvestment of BALCO, the State Government was oblivious of what was happening. The facts enumerated herein above clearly show that wide publicity was given at various stages in connection with disinvestment. Firstly, it was after due publicity that a global Adviser was appointed and thereafter advertisement was issued in an effort to select the strategic partner. The whole process of disinvestment of BALCO took place over a period of about two years. The issue was even debated by members in the Lok Sabha. There was nothing to prevent the State of Chhattisgarh at any stage prior to the selection of the strategic partner, either to forward its view or a representation or even to make an offer of buying the 51 per cent of the shares which were being sold. Once Shareholders Agreement has been signed, the offer of the State of Chhattisgarh to buy 51 per cent equity shares in....
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.... This was to be followed by the reduction of Government's shareholding to 26 per cent. The Disinvestment Commission had categorised BALCO as a non-core group industry. After the issue of global advertisement, Jardine Fleming Securities (I) Limited was appointed as global Adviser on 15-1-1998. It is on 12-6-1998 that the Chairman, Disinvestment Commission advised that the Government may consider offering sale of 51 per cent or more equity of BALCO to the strategic partner along with transfer of management. This, according to the Chairman, would fetch a better price of shares. In the light of these facts, it is not possible to accept the contention that the Union of India deviated from the advice which was given by the Disinvestment Commission. Firstly, the advice of this Disinvestment Commission was not binding on the Government of India. Furthermore, the terms of reference and the provisions contained in the Resolution dated 23-8-1996 which required the disinvestment under the supervision of the Commission and the Commission advising the Government on matters like consideration of the interests of the stakeholders, workers, consumers etc., were deleted by the subsequent Resolution ....
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....parties and ultimately only three viz., AlCOA/USA, HINDALCO, Sterlite conducted due diligence on BALCO between September and October, 2000. After carrying out the necessary inspection (due diligence), it is only two out of three applicants who gave their bid. AlCOA having dropped out, the bid of Sterlite industry was more and double of the bid of HINDALCO. The bidders at the time of furnishing 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 market, therefore, clearly was that 51 per cent shares of BALCO along with its management was not worth more than Rs. 550.5 crores. The only other bidder who had expressed interest was HINDALCO whose bid was only Rs. 275 crores. Under the circumstances, when the Government had decided to disinvest in BALCO by accepting a bid far in excess of the reserve price which was fixed by the Evaluation Committee, the said decision cannot, under any circumstances, be faulted. Whether the reserve price should have been Rs. 514.4 crores or more appears to be immaterial when the best price which has been offered for the sale of 5....
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....t the transfer of land even by lease in favour of BALCO must be regarded as being invalid. 61. In Samatha's case (supra), this Court had to consider the validity of the grant of mining lease of Government land in a scheduled area to the 'Non-Tribals'. The Court had to consider the effect and applicability of section 3(1) of the A.P. Scheduled Areas Land Transfer Regulation, 1959 which reads as follows :- "3. Transfer of immovable property by a member of a Scheduled Tribe - (1)(a) Notwithstanding anything in any enactment, rule or law in force in the Agency tracts any transfer of immovable property situated in the Agency tracts by a person, whether or not such person is a member of a Scheduled Tribe, shall be absolutely null and void, unless such transfer is made in favour of a person, who is a member of a Scheduled Tribe or a society registered or deemed to be registered under the Andhra Pradesh Cooperative Societies Act, 1964 (Act 7 of 1964) which is composed solely of members of the Scheduled Tribes." 62. While interpreting the said regulation framed by the Governor in exercise of powers under article 244 read with para 5(2) of the Fifth Schedule of the Constitution, thi....
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.... a tribe which has been declared to be an aboriginal tribe by the State Government by a notification in that behalf for the whole or part of the area to which the Code applies shall- (i)in such areas as are predominantly inhabited by aboriginal tribes and from such date as the State Government may, by notification specify, not be transferred nor it shall be transferable either by way of sale or otherwise or as a consequence of transaction of loan to a person not belonging to such tribe in the area specified in the notification; (ii)in areas other than those specified in the notification under clause (i), not be transferred or be transferable either by way of sale or otherwise or as a consequence of transaction of loan to a person not belonging to such tribe without the permission of a Revenue Officer not below the rank of Collector, given for reasons to be recorded in writing." Explanation.-For the purposes of this sub-section the expression "otherwise" shall not include lease. Sub-section (6) of section 165, before and after its amendment, does not contain any provision prohibiting the giving of tribal land by way of lease to non-tribals. Prior to its amendment, a land....
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.... prospective bidder. He contended that he had been closely connected with public sector undertakings and therefore, had the locus standi to file the Writ Petition challenging the said disinvestment by filing what he terms as a Public Interest Litigation. 67. Public Interest Litigation, or PIL as it is more commonly known, entered the Indian judicial process in 1970. It will not be incorrect to say that it is primarily the judges who have innovated this type of litigation as there was a dire need for it. At that stage, it was intended to vindicate public interest where fundamental and other rights of the people who were poor, ignorant or in socially or economically disadvantageous position and were unable to seek legal redress were required to be espoused. PIL was not meant to be adversarial in nature and was to be a cooperative and collaborative effort of the parties and the Court so as to secure justice for the poor and the weaker sections of the community who were not in a position to protect their own interests. Public Interest Litigation was intended to mean nothing more than what words themselves said viz., 'Litigation in the interest of the public'. 68. While PIL initia....
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....Supp.) SCC 87. Public Interest Litigation in that case was filed relating to the appointment and transfer of judges and it is in this connection that the question arose with regard to the locus standi of the petitioner to file the writ petition. While deciding this aspect, this Court examined as to what is the nature of the Public Interest Litigation and who can initiate the same. Bhagwati, J., observed as follows :- ". . . It is for this reason that in public interest litigation - litigation undertaken for the purpose of redressing public injury, enforcing public duty, protecting social, collective, 'diffused' rights and interests or vindicating public interest, any citizen who is acting bona fide and who has sufficient interest has to be accorded standing. . . ." (p. 215) 71. The limitation within which the Court must act, and the caution against the abuse of the same is referred to by Bhagwati, J. as follows :- "24. But we must be careful to see that the member of the public, who approaches the court in cases of this kind, is acting bona fide and not for personal gain or private profit or political motivation or other oblique consideration. The Court must not allow its ....
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....anand Pandey v. State of West Bengal [1987] 2 SCC 295, V. Khalid, J. observed as follows : "61. It is only when courts are apprised of gross violation of fundamental rights by a group or a class action or when basic human rights are invaded or when there are complaints of such acts as shock the judicial conscience that the courts, especially this Court, should leave aside procedural shackles and hear such petitions and extend its jurisdiction under all available provisions for remedying the hardships and miseries of the needy, the underdog and the neglected. I will be second to none in extending help when such help is required. But this does not mean that the doors of this Court are always open for anyone to walk in. It is necessary to have some self-imposed restraint on public interest litigants." After referring to the decision in Subhash Kumar v. State of Bihar [1991] 1 SCC 598 and other cases on the point, in Janata Dal v. H.S. Chowdhary [1992] 4 SCC 305, it was observed as follows :- "109. It is thus clear that only a person acting bona fide and having sufficient interest in the proceeding of PIL will alone have a locus standi and can approach the court to wipe out th....
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....al decision is taken regarding the execution of a public project. This is the appropriate time when all aspects and all objections should be considered. It is only when valid objections are not taken into account or ignored that the court may intervene. Even so, the court should be moved at the earliest possible opportunity. Belated petitions should not be entertained. 18. The same considerations must weigh with the court when interim orders are passed in such petitions. The party at whose instance interim orders are obtained has to be made accountable for the consequences of the interim order. The interim order could delay the project, jettison finely worked financial arrangements and escalate costs. Hence the petitioner asking for interim orders in appropriate cases should be asked to provide security for any increase in cost as a result of such delay or any damages suffered by the opposite party in consequence of an interim order. Otherwise public detriment may outweigh public benefit in granting such interim orders. Stay order or injunction order, if issued, must be moulded to provide for restitution." (p. 502) 74. Lastly, we need only to refer to the following observatio....
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....by the Government, is possible. When two or more options or views are possible and after considering them the Government takes a policy decision it is then not the function of the court to go into the matter afresh and, in a way, sit in appeal over such a policy decision." 75. It will be seen that whenever the Court has interfered and given directions while entertaining PIL it has mainly been where there has been an element of violation of article 21 or of human rights or where the litigation has been initiated for the benefit of the poor and the underprivileged who are unable to come to the Court due to some disadvantage. In those cases also it is the legal rights which are secured by the Courts. We may, however, add that Public Interest Litigation was not meant to be a weapon to challenge the financial or economic decisions which are taken by the Government in exercise of their administrative power. No doubt a person personally aggrieved by any such decision, which he regards as illegal, can impugn the same in a Court of law, but, a Public Interest Litigation at the behest of a stranger ought not to be entertained. Such a litigation cannot per se be on behalf of the poor and t....
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....llegations of lack of transparency or that the decision was taken in a hurry or there has been an arbitrary exercise of power are without any basis. It is a matter of regret that on behalf of State of Chhattisgarh such allegations against the Union of India have been made without any basis. We strongly deprecate such unfounded averments which have been made by an officer of the said State. 79. The offer of the highest bidder has been accepted. This was more than the reserve price which was arrived at by a method which is well recognised and, therefore, we have not examined the details in the matter of arriving at the valuation figure. Moreover, valuation is a question of fact and the Court will not interfere in matters of valuation unless the methodology adopted is arbitrary [see Duncans Industries Ltd. v. State of U.P. [2000] 1 SCC 633]. 80. The ratio of the decision in Samatha's case (supra) is inapplicable here as the legal provisions here are different. The land was validily given to BALCO a number of years ago and today it is not open to the State of Chhattisgarh to take a summersault and challenge the correctness of its own action. Furthermore even with the change in ma....