The Supreme Court on Thursday ordered a court-monitored Central Bureau of Investigation (CBI) probe into the initial stake sale of Hindustan Zinc Ltd (HZL) to Anil Agarwal-run Sterlite Opportunities and Ventures Ltd (SOVL) in 2002 when the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) was in power.
A bench, led by justice Dhananjaya Y Chandrachud, allowed the union government to disinvest its remaining shareholding of 29.5% in HZL since the company was no more a government-held company. It directed the CBI should register a regular case into the 2002 sale and submit its reports to the court quarterly.
The court cited a report by the Comptroller and Auditor General of India besides other instances and added there were “sufficient materials on record” to conduct a full-fledged investigation into the bidding process and valuation of shares and assets of HZL.
A preliminary inquiry was started by the CBI in November 2013 to look into alleged corrupt practices. But the government informed the top court that the case was closed since there was no evidence of criminality.
In 2002, the Centre decided to divest its controlling shares in HZL.
{{/usCountry}}In 2002, the Centre decided to divest its controlling shares in HZL.
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An association of officers related to the public sector undertaking filed a plea alleging illegalities in the disinvestment for benefits to a few by undervaluing the shares. It asked for a CBI probe into the deal and restraining the government from further divesting its share. The petition pointed out that the final decision to close the case was taken even though several officers of the CBI recommended the registration of a regular case for further inquiry.
HZL was incorporated as a public sector firm in 1996. The NDA government in August 2000 decided to disinvest 26% of its equity through a strategic sale. Sterlite Industries emerged as the highest bidder, offering ₹40.5 per share for the government’s stake. The transaction was completed in April 2002.
Further, as part of the “call option” part of the deal, the government further divested around 19% stake at the same price to the private entity in November 2003. Through this two-phase transaction, the government sold 45% of its stake in the firm for around ₹769 crore.
The Madras high court in 2012 approved the Scheme of Amalgamation of SOV with Sterlite Industries (India) Limited owned by Vedanta Ltd.