New Delhi: An application filed by the Union Ministry of Finance last month, to recall or modify a November 2021 Supreme Court judgment on the 2002 initial stake sale of Hindustan Zinc Limited (HZL), because of alleged “incorrect facts” presented before the court by the CBI, was turned down by the apex court Monday. The SC had in November directed a CBI probe in the HZL stake sale to the Anil Agarwal-run Sterlite Opportunities and Ventures Limited (SOVL).
Solicitor General Tushar Mehta, who had argued the case earlier on behalf of the CBI but is now appearing for the Centre, told a bench led by Justice D.Y. Chandrachud that it was unfortunate for the Government of India to make a statement that the foundational facts presented by the CBI to the court were factually incorrect. But added, “I can show each and every line in CBI’s report that is incorrect”, while pressing the court to hear out the department’s application. He asserted the disinvestment was a “collective decision,” taken after scrutiny at four levels.
Mehta’s submissions, however, did not impress the bench, which reminded the Solicitor General that its November judgment was pronounced after hearing both the Centre and CBI in the matter. It said the CBI had produced the entire file before the court and only after going through it did the court pass the order.
“It is not that everything was based on some statements. If the government tells us that CBI bungled, this cannot be an application that we can entertain,” the bench told Mehta. Besides, it said, the recall or modification application by the Department of Investment and Public Asset Management (DIAP), Ministry of Finance is a “misconceived” plea and that it is not the remedy available in law.
This prompted Mehta to withdraw the application and seek liberty to file a review petition against the November verdict.
“The review will be filed very soon and the grounds in the review application are likely to be the same as mentioned in the recall application,” one of the lawyers appearing for DIAP in the matter told ThePrint.
Incorporated as a public sector firm in 1996, HZL was put under the disinvestment scheme in August 2000 by the then Bharatiya Janata Party (BJP)-led NDA government, which decided to disinvest 26 per cent of its equity through a strategic sale.
In the bidding process Sterlite Industries emerged as the highest bidder, with an offering of Rs 40.5 per share for the government’s stake. As the transaction was completed in April 2002, the government further divested around 19 per cent stake at the same price to the private entity in November 2003. A total of 45 per cent stake was sold for around Rs 769 crore.
The disinvestment came under judicial scrutiny when the National Confederation of Officers Association of Central Public Sector Enterprises moved the Supreme Court in 2014 demanding a CBI probe into the deal. It also sought to restrain the government from further divesting its share.
Through its November 2021 judgment, SC allowed the Centre to disinvest its remaining 29.5 per cent shareholding in HZL since it was no longer a government-held company. At the same time, CBI was directed to investigate the alleged irregularities in the disinvestment process and told to submit quarterly reports to the court.
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‘CBI had not placed complete facts’
In its judgment the SC relied upon the Comptroller and Auditor General of India. Additionally, it said, there were “sufficient materials on record” to probe the bidding process and valuation of HZL’s shares and assets.
According to DIAP’s recall application, the CBI had initiated a preliminary enquiry into the allegations at the time of disinvestment. But after a thorough and elaborate investigation, the preliminary enquiry was closed.
DIAP told the court that the CBI had not placed this fact before the court, which the department learnt about only after the judgment was delivered. It said the department “had no occasion to know that the CBI had not placed the complete facts”.
DIAP further submitted that the content of the file notings as well as documents given to the court by the CBI that later became the basis of the findings in the November 2021 judgment were not correct.
“Had the following facts (now placed in the DIAP’s application) been brought before this Hon’ble Court, this Hon’ble Court would have been satisfied that despite some intra-departmental notings which may have been made by certain CBI officials taking divergent views, the final conclusion regarding closure of the preliminary enquiry is just and proper,” stated DIAP’s application, which ran into more than 400 pages.
It further addressed the pitfalls of commencing a CBI probe 20 years after the disinvestment and requested the court to weigh in the concerns.
Since the disinvestment process is carried out at a global level and involves international players, to order a probe almost two decades later, in the absence of true facts, would “severely deter global players from participating in the process of disinvestment in future,” the application added.
A CBI probe, the application stated, would severely undermine the efforts of the Centre to disinvest its shareholding in public sector enterprises, with a view to allow private participation to fully optimise the employment and growth potential of such organisations.
“Such directions will have an adverse and demoralising effect on the functioning of the executive and decision makers,” the application claimed.
The plea went on to place “foundational facts” pertaining to the entire disinvestment process to show that the conclusion drawn by “certain CBI officials” is “contrary” to the contemporary record.
‘Union govt not dealing with imposter’
The DIAP application annexed documents as well as minutes of the meetings that took place regarding the decision to disinvest 26 per cent of the stake in HZL, instead of 25 per cent, facts concerning alleged irregularities in the bidding process — which includes the procedure followed to appoint a global advisor, an Asset Valuer, renewed exercise of bidding and allegations that Ministry of Law’s recommendations were disregarded, as well as allegations on asset valuation.
On CBI’s noting that it could not trace any officers representing the global advisor, M/s BMP Paribas, appointed to ensure the disinvestment process is compliant with all applicable laws and global regulations, DIAP said: “It is unfortunate that such a conclusion is drawn by certain officials of the CBI”.
“Union Government then was definitely not dealing with an imposter who was using the name of M/s BNP Paribas,” the DIAP added, saying there are detailed correspondences with the said global advisor through a very senior associate of the firm who is a “world-renowned mining expert and a consultant” who has headed several international organisations.
DIAP claimed the CBI never required these correspondences so they were never given these documents.
“It is quite possible that in a global bank like M/s BNP Paribas when an investigating agency is searching for some officer of its associate/subsidiary after almost a decade, it may not find such officers, more particularly when the company has undergone voluntary liquidation as far as back in the year 2011,” DIAP said, explaining the possible reason for the CBI’s noting on the global advisor, who, it added, was appointed after a global competitive bidding process.
Even on the appointment of asset valuer, the CBI failed to place full details and true contemporaneous facts found in the official record of the government.
“This lack of collecting facts by certain officials of the CBI obviously created an unwarranted impression about the alleged arbitrary selection of the asset valuer,” said DIAP’s application, as it disclosed the extensive process that was followed in this regard.
According to the DIAP, in view of the intricacies involved in the commercial decision-making process, the Director (Prosecution), CBI, had rightly concluded that no case for registering a regular case is made out. This was dissented to by the then Director (CBI), Shri Ranjit Sinha. But before the matter could be referred to the Attorney General, Sinha’s tenure was over and the new director concurred with the view of the Director (prosecution).
“It is respectfully submitted that the disinvestment in question is twenty years old. The decision-making process has been collective. Many of the officers/ individuals who participated in the process would have either died or must be in the last phase of their lives. The possibility of their remembering anything after twenty years is also remote,” stated the DIAP.
(Edited by Poulomi Banerjee)
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