BHARAT ALUMINIUM COMPANY VS KAISER ALUMINIUM TECHNICAL SERVICE INC.

2012 SC JUDGEMENT

4 JUDGE BENCH: JUSTICE D.K JAIN, SURINDER SINGH, RANJANA DESAI, JAGDISH KHEHAR

APPELANT: BHARAT ALUMINUM COMPANY

RESPONDENT; KAISER ALUMINUM TECHNICAL

FACTS: The case arose to challenge the validity of the decision of the Union of India to disinvest and transfer 51% shares Company
Limited . The case was filed by way of a writ petition by the Employees union of the company. by filing Writ Petition in 1999 in the High
Court of Delhi, the Cabinet Committee on Disinvestment upon the recommendation of the disinvestment commission approved the sale
of 51% of the shares of BALCO to private ownership and thus reducing the status of the company from a Government Company to a
private enterprise. There were various petitions filled in the highcourt of delhi and chhatisgarh. With the filling of the writ petition an
application for transfer of the petitions was filed by the Union of India in the Supreme Court and, the writ petitions which were pending
in the High Court of Delhi and Chattisgarh were transferred to the Supreme Court.
 CONTENTIONS RAISED BY THE BALCO EMPLOYEES UNION
(1) Before disinvestment, the entire paid-up capital of BALCO was owned and controlled by the Government of India and its administrative
control co-vested in the Ministry of Mines. BALCO was, therefore, a State within the meaning of Article 12 of the ConstitutionTherefore, by the
reason of disinvestment the workmen had lost their right and protection under Articles 14 and 16 of the Constitution. This was an adverse civil
consequence and, therefore, they had a right to be heard before and during the process of disinvestment.
2. It was further submitted that the workmen had reason to believe that apart from the sale of 51% of the shares in favour of Sterlite Industries the
Agreement Postulated that balance 49% will also be sold to them with the result that when normally in such cases 5% of the shares are disinvested
in favour of the Employees the same would not happen in the present case.
3. It was also contended that the implementation of the policy of disinvestment in the present case had failed to evolve a comprehensive package
of socioeconomic and political reform and to structure the decision making process so as to achieve in a just, fair and reasonable manner.
4. the Disinvestment Commission had recommended that some percentage of equity share may be offered to the workers to solicit their
participation in the enterprise and which would go a long way in proving the disinvestment plan meaningful and successful. In this regard, it was
not shown from any material or record that the Government of India had at any stage addressed itself to this vital aspect of the disinvestment
process or had taken into consideration the likely repercussions on the interest, right and status of the employees and workers.

5. The contention of the Advocate General for the state of Chattisgarh that the whole process and decision of the disinvestment of
BALCO lacked transparency
6. Furthermore, the State of Chattisgarh claimed that the property on which BALCO was founded was a tribal estate, so that the
land may have been acquired and used by companies of the public sector, but the tribal land could not have been shifted to a non-
tribal. It was also reported that the ban on the selling of tribal land came into effect after the majority shareholding in BALCO
had been sold to a non-tribal company.
• CONTENTIONS OF THE UNION OF INDIA
• It was submitted that disinvestment had become imperative both in the case of Centre and the States primarily for three reasons.

• a. Firstly, despite every effort the rate of returns of governmental enterprises had been lowing down,

• Secondly, neither the Centre nor the States have resources to sustain enterprises that are not able to stand on their own in the new competitive

environment

• Thirdly, despite repeated efforts it was not possible to change the work culture of governmental enterprises. As a result, even the strongest

among them have been sinking into increasing difficulties as the environment is more and more competitive and technological change has

become faster.
• DECISION
• Thus it was stated by the Attorney General ( goolam essaji vahanvati) on behalf of the Union of India that the
Court should not interfere in the entire process as .
• it was purely an administrative decision, to which the power of judicial review did not extend
• Another important factor which can be observed was that the challenge was primarily to challenge the policy of
disinvestment as being adopted and followed by the Union of India, the matter, as decided by the Supreme Court,
revolved primarily around the rights of the employees and their consequent protection after the company had
actually been disinvested. The Court declined to review the policy decision of the Union Government on the
adoption of a policy of disinvestment .
• Also, the Court circumscribed the extent to which matters of economic policy and disinvestment in particular, and
consequently matters of policy, shall be scrutinized by courts. The Court was categorical in stating that ‘‘it is
neither within the domain of the Courts nor the scope of judicial review to embark upon an enquiry as to whether a
particular policy is wise or whether a better public policy can be evolved
• IMPLICATIONS THAT FOLLOWED
• the decision given by the Court in the BALCO case was based upon a sound appreciation of arguments, yet there
are many implications which may follow pursuant to the decision.
• 1. The major emphasis is on the policy of disinvestment. Though the Court did not go into the merits of the
disinvestment policy per se yet, it did silently approve the policy to be followed by the Union. Thus the court
supported the revival of the national economic with the support of private lines. The earlier policy of socialist
economy, as upon which the Constitution was based and is as well enshrined in the Preamble,
• The observations of the Court on the aspect of natural justice may have been insignificant. The Court held that the
principles of natural justice did not apply even in case the rights of the employees were affected as regards the
change of their employer. They were not even given an opportunity to be heard and this was the sole bone of
contention. For the very reason that Sterlite industries (the buyer) had given an undertaking that no employee of
BALCO would be removed and the government had taken sufficient steps towards the protection of the employees,
• the method of computation of BALCO’s capital. Of the three different methods, the accounting method adopted for
arriving at the reserve price for the sale of BALCO was the one with the lowest result. It was never questioned by
the Court.
 THE COURT OBSERVED THAT
• it is neither within the domain of the Courts nor the scope of the judicial review to embark upon an enquiry as to whether a
particular public policy is wise or whether better public policy can be evolved.

Process of disinvestment is a policy decision involving complex economic factors. The Courts have consistently refrained from
interfering with economic decisions as it has been recognized that economic expediencies lack adjudicative disposition and
unless the economic decision, is demonstrated to be so violative of constitutional limits to reason, that the Courts would decline
to interfere
In taking of a policy decision in economic matters at length, the principles of natural justice have no role to play. While it is
expected of a responsible employer to take all aspects into consideration including welfare of the labour before taking any policy
decision that, by itself, will not entitle the employees to demand a right of hearing or consultation prior to the taking of the
decision
Thus the Supreme Court observed, “What may have been in the public interest at a point of time may no longer be so. The
Government has taken a policy decision that it is in public interest to disinvest in BALCO. While it was a policy decision to start
BALCO as a company owned by the Government, it is as a change of policy that disinvestment has now taken place. If the initial
decision could not be validly challenged on the same parity of reasoning, the decision to disinvest also cannot be impugned
without showing that it is against any law or mala fide
Further, the Court observed that it was satisfied that the workers' interests are adequately protected in the process of
disinvestment. Apart from the aforesaid undertaking given in the Court, the existing laws adequately protect workers' interest and
no decision affecting a huge body of workers can be taken without the prior consent of the State Government.
 The Court also gave a conclusion to the entire matter in the judgment and held that

 The decision to disinvest and the implementation thereof is purely an administrative decision relating to the economic
policy of the State and challenge to the same at the instance of a -body cannot fall within the parameters of Public Interest
Litigation.

 it is not for the Courts to consider relative merits of different economic polices and consider whether a wiser or better one
can be evolved. For testing the correctness of a policy, the appropriate forum is the Parliament and not the Courts.

Thus, apart from the fact that the policy of disinvestment cannot be questioned as such, the facts herein show that fair, just and
equitable procedure has been followed in carrying out this disinvestment.
Judicial interference by way of PIL is available if there is injury to public because of dereliction of Constitutional or statutory
obligations on the part of the government. Here it is not so and in the sphere of economic policy or reform the Court is not the
appropriate forum.
Lastly, no ex-parte relief by way of injunction with respect to public projects and schemes should be granted. It is only when
the Court is satisfied for good and valid reasons, that there will be irreparable damage, an injunction be issued after hearing all
the parties. Even then the Petitioner should be put on appropriate terms such as providing an indemnity or an adequate
undertaking to make good the loss or damage in the event the PIL filed is dismissed.
CONCLUSION

The fact of the administrative discretion and power to adopt and implement policy decisions being beyond the scope of judicial
review unless it suffered from illegalities or malafide was upheld.

The silent approval of the disinvestment process by the Apex Court also symbolises the fact that the Court also feels it in the
national interests and the economy on the whole. This the Court expounded in a later case when it approved the sale
HINDUSTAN PETROLEUM COMPANY and BHARAT PETROLEUM COMPANY on similar lines as BALCO.

Thus, on a whole, though the case may failed to give any novel concept, yet it is landmark of its own kind. It was an attempt on
the part of the Court to define its own limits on judicial review. It also stretched the scope for the exercise of administrative
powers in making policy decision. The limits of Public Interest Litigation with regards to the disinvestment were also laid for the
first time