New Delhi, Nov. 7: The Supreme Court today issued notice to the Union ministries of finance and disinvestment on a petition challenging privatisation of Hindustan Copper Ltd (HCL).
A division bench of Justices S. Rajendra Babu and G. P. Mathur, which issued the notice, also tagged on the matter with another petition challenging privatisation of railway coach manufacturing company Jessop and Co.
The petition challenging HCL's privatisation has been filed by four labour unions of the state-owned firm which contended that the PSU was a creation of an act of Parliament in 1972 and therefore, it could not be privatised by an executive fiat.
This position of law was settled by the apex court itself in the Hindustan Petroleum Corporation/Bharat Petroleum Corporation privatisation in which the court had said a company or corporation or a PSU nationalised by an enactment of Parliament could be divested only by another enactment or a repealing act and that an executive order was not enough to divest.
Senior counsel for the petitioner, V. R. Reddy contended that a series of executive decisions taken for divestment of the government stake in HCL were “patently illegal” as the prior approval of Parliament had not been sought.
He sought a direction to the government not to privatise HCL without parliamentary approval as the constitution of the PSU was in pursuance of the 1972 Indian Copper Corporation (Acquisition of Undertaking) Act.
“To privatise PSUs created by a legislation, the government has to first take permission from Parliament by amending the law or repealing it,” Reddy said.
The petition also admitted that HCL suffered a setback mainly due to a substantial fall in London Metal Exchange copper prices and an increase in the cost of copper ore mining.