Divestment Minister Arun Shourie on Thursday raised questions over the Supreme Court judgment halting divestment in Hindustan Petroleum Corporation Ltd and Bharat Petroleum Corporation Ltd without parliamentary approval, saying it could lead to reopening of the divestment process in government companies since 1991.

"On this principle, divestment of all companies should be subject to clearance by Parliament. It cannot apply to companies only when you bring down the government's equity from 51 per cent to 49 per cent because every single share has been paid out of the Consolidated Fund of India. So how have minority shares been sold since 1991," Shourie said after studying the judgment in detail.

Referring to the court's observation that divestment could not take place without Parliament's approval because all expenditure from the Consolidated Fund was approved by it, Shourie said this logic would not only apply to the two public sector oil firms, but also to companies set up under Acts of Parliament or nationalised in a similar manner.
This was because shares were bought out from the Consolidated Fund of India and dividend was paid into it, he said.

Referring to the observation that the judgment did not apply to the divestment in Maruti Udyog, which was also set up under an Act of Parliament, because there was no challenge, Shourie said, "It is a new logic from an institution that has been in the forefront of judicial activism by taking into hand matters that were not brought before it."
According to Shourie, it was a new logic because even if it was not challenged, it was up to the court to take notice of it in case the government had done something illegal relating to Maruti. The minister felt that the judgment could also have implications on the government's decision to privatise the Delhi and Mumbai airports because the Airports Authority of India was set up by an Act of Parliament to control, manage and own the airports.

"How can you hand over 74 per cent equity in a new company to a private partner for controlling, managing and owning the airports without the sanction of Parliament," Shourie wondered.

Emphasising that the judgment deserved close examination by the government because of its logic and far reaching implications, Shourie said, "All these things have to be carefully studied and put up for discussion before the Cabinet Committee on Divestment on October 3".

He said other points raised in the judgment also merited close study by the government and legal experts.

Citing the example of the government's handling of sick mills of the National Textile Corporation, Shourie said the mills set up or nationalised under Acts of Parliament were being restructured or closed.

"Probably 50 mills of this corporation have been closed. By the logic of this judgment, all these decisions have been put into question," he said.

Besides, Shourie said the same logic would apply to a large number of enterprises that were under the state government on account of the consolidated fund of the state government or their creation under Acts of state legislature.

He wondered as to how a state government could divest its stake in an enterprise like the Road Transport Corporation, which had been paid out of the consolidated fund of the state government without the legislative approval.