zinc

SC Orders CBI Probe Into 2002 Hindustan Zinc Limited Disinvestment – Free PDF Download

 

What has happened?

  • On Thursday, the Supreme Court gave the go-ahead to the Centre to disinvest its 54% residual shares in Hindustan Zinc Ltd (HZL).
  • The top court also directed a CBI probe into alleged irregularities in the process of disinvestment of 26% of government shares in the company in 2002.
  • The judgment, which came on a petition filed by the National Confederation of Officers Association of Central Public Sector Enterprises and some others, including a former employee of HZL,
  • Will enable the government to carry forward the disinvestment of HZL and raise revenue for other public purposes by offloading the residual stake estimated to be worth Rs 40,000 crore in the open market.

About HZL

  • The Metal Corporation of India Limited was incorporated in 1944 as a public limited company under the Companies Act 1913.
  • On August 2, 1976, the President promulgated the Metal Corporation (Nationalisation and Miscellaneous Provisions)
  • This ordinance was replaced by The Metal Corporation (Nationalisation and Miscellaneous Provisions) Act, 1976.

Disinvestment of HZL

  • The Union Government took steps for the disinvestment of its shareholding in HZL in 1991-92.
  • In the first tranche, the government disinvested 24.08% of its shareholding in the domestic market.
  • Of this, 12.54% was acquired by financial institutions, 7.58% by corporate bodies and 3.96% by Indian nationals.
  • HZL was listed on stock exchanges.
  • The second tranche of disinvestment in HZL took place in pursuance of the Union Government’s decision to disinvest 26% of its shareholding in HZL to a ‘strategic partner’.
  • A Shareholders’ Agreement and a Share Purchase Agreement were executed on April 4, 2002 with Sterlite Opportunities & Ventures Ltd., who was chosen as the strategic partner.
  • The Government accordingly disinvested 26% of its equity in HZL in favour of SOVL leaving it with only 49.92% stake.
  • On April 10, 2002, SOVL acquired 20% of the equity in HZL from the open market by a mandatory open offer, in compliance with the Securities and Exchange Board of India norms.
  • As a consequence, SOVL holding in HZL rose to 46%.
  • The Shareholders’ Agreement envisaged two call options.
  • SOVL exercised its first call option for 18.92% of the equity holding in August 2003, which was transferred in its favour in November 2003.
  • Following this, SOVL became a majority shareholder with a 64.92% equity stake in HZL.

Case filed against HZL

  • In November 2003, a PIL was filed before the Jodhpur Bench of the Rajasthan High Court by one Rajendra Kumar Razdan,challenging the second tranche of
  • The SC stayed the proceedings and transferred this and other similar petitions to itself.
  • They were dismissed in August 2008.
  • On October 31, 2012, Maton Mines Mazdoor Sangh instituted a writ petition before the SC challenging the proposed disinvestment of the Union government’s residuary shareholding.
  • This petition was summarily dismissed by the SC on December 10, 2012.
  • Following this, the National Confederation filed a writ petition in February 2014.

What did the National Confederation petition seek?

  • The petition sought a direction to the Government and the Department of Disinvestment to refrain from disinvesting the residual shareholding of 54% in HZL without amending the Nationalisation Act 1976 and A direction to the CBI to periodically file status reports before the SC in respect of the investigation being conducted by it,
  • So that it can be monitored by this Court till the filing of the charge-sheet in the appropriate court.

CBI case

  • The CBI initiated a preliminary enquiry into suspected irregularities in the course of the disinvestment of the 26% of equity holding of the Union Government to SOVL
  • in 2002 on November 6, 2013.
  • In March 2017, the agency decided to file a closure report.

SC on CBI probe?

  • The SC noted that there were differences of opinion regarding the closure.
  • While the Special Prosecutor, CBI Head Office, New Delhi, Director of Prosecution and Special Director recommended closure,
  • The Additional Director, CBI and some others recommended converting the preliminary enquiry into a regular case.
  • The court, which went into the materials said they “satisfy this Court’s conscience for exercising its exceptional powers to direct the CBI to conduct an investigation into the matter” and That “a prima facie case for a cognizable offence, as mandated in…the CBI Manual, has been made out in this case”.
  • The SC directed registration of a regular case to be followed “by a full-fledged investigation” and directed that status reports be filed before it.

Q) Zinc in the form of ores can be found in which of the following places?

  1. Antarctica
  2. Canada
  3. Canada and Russia
  4. Russia and Antarctica

 

 

 

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