The Telegraph
Since 1st March, 1999
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Two Aruns in search of options

New Delhi, Sept. 25: The government is looking at all options, including a review of the Supreme Court judgement that stayed the divestment of stake in oil PSUs HPCL and BPCL by a larger bench.

“We are looking at all options. When we decide on something, we will tell you,” law minister Arun Jaitley told reporters on the sidelines of a conference on the income tax appellate tribunal here today. “There is an option. But I will not tell you now,” Jaitley, who was on his way to meet disinvestment minister Arun Shourie, said.

One of the options that the government is believed to be considering is a review of the Supreme Court judgment by a constitution bench. The Supreme Court halted the disinvestment of HPCL and BPCL while asking the Centre to get approval from Parliament before going ahead with the sale of oil PSUs.

The court said the government, through an executive order, could not override a parliamentary legislation that created HPCL and BPCL in 1974 after acquiring the assets of Esso and Burmah Shell.

Another option that the government is mulling is a single legislation that will allow it to disinvest its stake in state-run companies which have been set up or nationalised through separate acts of Parliament.

Work on the legislation will start if the government's legal luminaries are unable to find any remedy in law to today's judgement by the apex court.

Although the Supreme Court judgement stalled divestment in HPCL and BPCL, the BJP-led government believes it can be extended to any PSU set up through acts of Parliament where there are similar provisions on government ownership by citing this judgement as case evidence.

The new law being thought of would repeal the effective parts of these nationalisation or establishment acts which envisaged that the government or one of its agencies would hold principal stakes or exercise managerial control in these companies in perpetuity, either by specifically stating so or by implying such control as has been done in the Esso Nationalisation Act which set up HPCL.

Shourie will prepare a paper on the options before the government and submit it to the law minister. Later, it will be considered by the cabinet committee on disinvestment on October 3.

Both Jaitley and Shourie are of the opinion that foreign investors have become apprehensive about the reforms process, particularly the government’s privatisation drive, in the wake of the Supreme Court judgement.

Within a week of the judgement, the Madras High Court has asked the Centre to put on hold the final disinvestment of Madras Fertilisers till a decision is taken on a petition challenging the PSU’s privatisation even though it allowed the Union government to go ahead with the procedure.

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