Supreme Court Allows Government To Offload Its Residual Stake Of 29.5% In Hindustan Zinc Ltd
The court also noted that there existed a prima facie case of violation of divestment norms in the 2002 sale of the government's stake.
The Supreme Court of India, on November 18, granted permission to the central government to sell its remaining stake of 29.5% in Hindustan Zinc Ltd. (HZL) in the open market, noting that after 2002, the HZL was no longer a government company. It said that following the disinvestment of shares in 2002, the Union Government has lost control of the erstwhile PSU corporation.
The bench headed by Justice D. Y. Chandrachud has also ordered the Central Bureau of Investigation (CBI) to open a formal investigation into the alleged irregularities in the disinvestment of the government’s controlling stake in Hindustan Zinc Limited (HZL) in 2002 and submit its reports to the court quarterly.
The top court had quoted the report of the Comptroller and Auditor General of India inter alia, saying that there were “sufficient materials on record” to carry out a full-fledged investigation into irregularities in the bidding process and valuation of shares and assets of Hindustan Zinc Ltd.
Centre sought for the closure in the preliminary enquiry into 2002 Hindustan Zinc divestment. However, the court took note of a fact that there existed a prima facie case of violation of divestment norms in the 2002 sale of the government's stake and rejected the closure. The court has ordered a regular CBI probe into it now.
In 2014, the Central Public Sector Enterprises (CPSEs) filed a petition in the court alleging “undervaluation of shares' ' during 2002 divestment.
In 2016, the Supreme Court had restrained the government, not to carry out any further divestment of its residual stake in the company.
In March this year, the government moved to court seeking approval for further offloading its stake of 29.54 percent in the company.
Hindustan Zinc Limited, a subsidiary of Vedanta Limited, is India’s only producer of zinc, lead, and silver. The NDA government in August 2000 decided to dispose of 26% of its equity through a strategic sale. The top bidder was Sterlite Industries which offered ₹40.5 per share for the government’s stake. The transaction was concluded in April 2002.