National Confederation of Officers Association of Central Public Sector Enterprises v. Union of India
Background
A registered trade union of officers of central public sector enterprises, along with a former Hindustan Zinc Limited (HZL) employee, challenged the Union Government's plan to sell its remaining 29.54% shareholding in HZL. HZL had originally been nationalised in 1966 and was progressively privatised through disinvestments starting in the 1990s and a major 2002 sale that handed majority control to a private group (Sterlite/Vedanta entities). The petitioners argued the further sale of the residual stake violated the Supreme Court's own 2003 ruling in Centre for Public Interest Litigation v. Union of India, which restricts disinvestment of genuine government companies without parliamentary sanction, and also alleged irregularities in the original 2002 disinvestment.
Decision Breakdown
The Court held the petition was not barred by res judicata merely because an earlier, similar writ petition had been summarily dismissed without a decision on merits. It ruled that the 2003 Centre for Public Interest Litigation precedent did not apply here because HZL had already ceased to be a "government company" by the time of this residual-stake sale: the Union held only a minority stake by then. The planned sale of the residual 29.54% was therefore not barred, especially since the government undertook to sell it transparently through the market under SEBI regulations to get the best price. However, the Court found sufficient material to warrant a fresh criminal investigation into the original 2002 disinvestment of HZL's 26% stake and directed the CBI to register a regular case and report back to the Court every quarter.
Lesson Learnt
Once a public sector company has genuinely and lawfully passed into private majority control, courts will not block further sale of the government's remaining minority stake on the same grounds used to block the original privatisation, but courts can still order a fresh criminal probe into a years-old disinvestment decision if the material on record raises a prima facie case of irregularity.