The Supreme Court on Friday reserved its order on petitions challenging the Union government's decision to privatise oil sector PSUs Hindustan Petroleum Corporation Ltd and Bharat Petroleum Corporation Ltd.

A bench comprising Justice S Rajendra Babu and G P Mathur reserved its verdict on the two petitions after hearing senior advocates Fali S Nariman and Shanti Bhushan for the petitioners and senior advocate Harish Salve for the Union government.

Nariman, appearing for the Oil Sector Officers Association, said the government cannot divest in HPCL and BPCL, which were nationalised by a legislation enacted in the Parliament.

"Can the executive by its order reverse the two enactments of Parliament nationalising the oil sector companies," Nariman contended.

He said in a Parliamentary system, the government must follow norms and approach Parliament to either repeal the Nationalisation Act or amend it suitably so that it can sell its shares in HPCL and BPCL.

He said the Balco judgement of the Supreme Court does not apply to HPCL and BPCL, as the aluminum company was not acquired by an act of the Parliament.

Appearing for the other petitioner, Centre for Public Interest Litigation, Bhushan contended that once the Nationalisation Act declared a policy that the government was acquiring the oil sector companies to subserve the public interest, no executive order could change it.

Salve, appearing for the Union government, said the Nationalisation Act did not put any bar on the government to sell its shares as the law is one for all public sector undertakings like BALCO, BHEL and Maruti.

All the PSUs enjoyed the same right under the Companies Act and the Nationalisation Act did not specifically bar the government from lowering its stake as was provided in the nationalisation statutes for banks and coal mines.

He said under the act for nationalisation of banks and coal mines, it was specifically provided in the legislation that the central government shall hold, at all times, 51 per cent of the paid up share capital.

He said the two companies - HPCL and BPCL - were acquired from the assets of Caltex and Esso, but the main assets came through merger and not through nationalisation.

The present shape of the two companies bore no resemblance to their predecessors and these two companies had sold refineries on their own to private parties.

When the companies had sold refineries to private parties, where is the bar for the government to sell its shares in these two companies, he asked.

Nariman said why was the government refusing to go to Parliament when the Nationalisation Act envisaged that oil sector should be with the government.

He said the petitioners have no grievance about the policy of the government to privatise PSUs, but the government should follow the Parliamentary system of governance.