The Hindu Business Line : Kerala HC puts brakes on ICVL divestment proceedings

THE Kerala High Court has ordered that further proceedings in the disinvestment of the Palakkad-based Instrumentation Control Valves Ltd (ICVL) would be subject to further orders on a writ petition challenging the disinvestment of 51 per cent of Central Government's stake in favour of Larsen & Toubro Ltd.

Mr Justice K. Balakrishnan Nair passed the order on the petition filed by Instrumentation Employees Forum, Palakkad unit. According to the petitioner, ICVL was a profit-making company and a market leader till 1988-89. The company had been referred to the BIFR in 1994. A scheme was formulated by the BIFR which had been reviewing it periodically. The petitioner said that the company had been making profits since the formulation of the scheme by the BIFR. However, it was decided at the Inter-ministerial group held on January 2001 to disinvest the subsidiary and invite Expression of Interest (EoI).

As many as five companies had submitted their EoI for ICVL and there was no response for other subsidiaries. The Core Group of Secretaries at a meeting held on April 16, 2003 had accepted the bid of L&T for acquisition of 51 per cent of the Government's stake subject to approval of BIFR.

In spite of the fact that ICVL was a profit-making unit, Instrumentation Ltd (IL) submitted a modified rehabilitation proposal envisaging formation of only one joint venture for the Control Valves unit at Palakkad and sale of IL's subsidiary, Rajasthan Electronic Instrumentation Ltd, at Jaipur and integrating the rest of the business under Instrumentation Ltd. It was also agreed that the operating agency would seek suitable direction separately from the BIFR for disinvestment of Palakkad unit.

The petitioner contended that the proceedings of the BIFR could not be regarded as a revival proposal of the company other than efforts to hand over the assets to L&T for a meagre amount.

The Government now proposed to disinvest the share for a total consideration of Rs 16.20 crore. When the petition came up, Mr George Poonthottam, counsel for the petitioner submitted that a perusal of the records and proposals of the Government officials would demonstrate a compromise of the interest of the State at every stage. The action was not in public interest and protecting the interest of the State. The BIFR had also acted contrary to the interest of the Kerala Government.

More Stories on : Disinvestment | Courts/Legal Issues | PSU | Kerala

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page