Holding

The Court held that the disinvestment of BALCO is a policy decision involving economic judgment, not subject to judicial review, and that all procedural safeguards for workers and statutory requirements, including land transfer provisions, were duly complied with, leading to dismissal of the petitions.

Summary

The Union of India sold a 51% stake in Bharat Aluminium Company Ltd (BALCO), a public sector undertaking, to Sterlite Industries, prompting challenges by the BALCO Employees Union, the State of Madhya Pradesh, and a public‑interest litigant. The petitioners argued that the disinvestment violated constitutional provisions (Arts. 12, 14, 16), denied workers a right to be heard, breached the Disinvestment Commission’s recommendations, was not transparent, and involved an illegal transfer of tribal land. The Supreme Court held that the disinvestment was a governmental economic policy decision not amenable to judicial review, that workers’ rights were adequately protected through the shareholders’ agreement and existing labour laws, that the valuation and procedural steps were proper, and that the land transfer complied with the M.P. Land Revenue Code. Consequently, all writ petitions were dismissed.

Issues considered

The disinvestment of 51% equity in BALCO is amenable to judicial review under Articles 32 and 226.
Whether BALCO, after disinvestment, remains a 'State' under Article 12, thereby invoking Articles 14 and 16 for its employees.
Whether the workers are entitled to a pre‑decision hearing or consultation under principles of natural justice.
Whether the Disinvestment Commission’s recommendations are binding on the Government.
Whether the valuation and reserve price of the 51% stake were arbitrary or illegal.
Whether the process was transparent and fair.
Whether the transfer of land originally granted to BALCO violates the M.P. Land Revenue Code and tribal land provisions.
The locus standi and admissibility of the public‑interest litigation filed by a non‑employee.

Legislation cited

Companies Act, 1956
Constitution of Indias. Art.12, s. Art.14, s. Art.16, s. Art.21, s. Art.226, s. Art.31, s. Art.32
Industrial Disputes Acts. Sec.25(0)
M.P. Land Revenue Code, 1959s. Sec.165(6)

Subjects

disinvestmentpublic sector undertakingjudicial reviewworkers' rightsnatural justicepublic interest litigationvaluationland transfertribal landtransparencyeconomic policy

Judgment

BALCO EMPLOYEES UNION (REGO.) A
v.
UNION OF INDIA AND ORS.

DECEMBER 10, 2001

[B.N. KIRPAL, SHIVARAJ V. PATIL AND B
P. VENKATARAMA REDD!, JJ.]

Disinvestnzent:

Disinvestment of 51% equity qf Balco, a Public Sector Undertaking, by
Central Govemnient to a Strategic Partner and transfer o,fnranagement thereof-
c
Amenability to Judicial Review-Held, it is cm ec~nomic policy decision qf the
Govenunent and hence not tunenable to judicial review-Constitution o,f India,
1950 -Articles 32 & 226.

Protection of workers' rights and interests-Availability of under the D
Constitution-Held, not available-Hoivever, on .facts, st~{ficient sqfeguards
anl/ protection are built in various agree111ents entered into with the Strategic
Partner besides availability of protection under existing laws-Constitution of
India, 1950-Articles 12, 14 and 16.

Non-consultation with State Govemment by Union of India regan/ing E
disenvestment-0.(fer by the State Government to purchase 51% equity at a
higher price-Held, on facts, State Government was not oblivious of the
disinvestment of BALC0-0.[fer not valid since the disinvestment is over.

Disinvestn1ent Co1nn1ission reconunendations to Union of India-Bind-
F
ing nature-Held, not binding.

Valuation o,f a:-;sets to arrive at a reserve price-Correctness thereof-
Held, valuation is a question of fact and hence, not an1enable to Judicial
review-On facts, proper procedure has been .followed in valuation.
G
Disinvestment decision of BALCO-Transparency of-Held, there is
complete transparency-On .fai:ts,fair and equitable procedure was followed in
carrying out disinvestn1ent-Clain1 by the State Government uncharitable and
baseless.

Trans.fer of land, which was originally a tribal land and given on lease H·
5ll
512 SUPREME COURT REPORTS [2001] SUPP. 5 S.C.R.
A to BALCO, to a non-tribal o;; disinvestment-Validity of-Held, change qf
management or shareholding does not involve tran~fer of land-Allegation
baseless since original tran~fer of land to BALCO WllS not questioned-M.P.
Land Revenue Code, 1959-Mining Concession Rules.

Ad111inistrtitive Unv:
B
Principles o,f Natural Justice-Right o.f hearing and consultation with
employees b~fore taking economic policy decisions-Availability of-Held, not
available.
•
Public Interest Litigation :
c
Petition Oil Disinevstment decisions-Admissibility of-Grant of Exp-
parte reli~f-Held, not admissible as it is not meant to challenge financial or
economic decisions of the Government-Ex-parte reli4should be granted after \
taking undertaking from the Petitioner to indemnify any loss or damage if PIL
is dismissed since any delay will be contrary to public interest.
D
Mis. Bharat Aluminium Comapny Limited (BALCO) was incorpo-
rated in 1965 under the Companies Act, 1956 as a Public Sector Undertak-
ing (PSU). The State Government provided land partly by transfer of its
own land and partly through land acquisition to the undertaking for its
E establishment. Since 1990-91, successive Central Governments had been
planning to disinvest some of the PSUs and in 1996, the Union of India
constituted a Disinvestment Commission as an independent non-statutory
advisory body and set out broad terms of reference. In 1997, the Commis-
sion recommended the Union of India to privatise BALCO and suggested
F disinvestment of 40% of equity holding to a Strategic Partner and dilution
of remaining 60 % holding through public offer over a period of time.
Subsequently, on the basis of the revised recommendations of the Commis-
sion, Chairman suggested the Union of India to offer 51 % or more to the
Strategic Partner along with transfer of management. The Union of India
approved the sale of 51 % equity and appointed a Global Advisor through
G
competitive bidding process to carry out the process cf disinvestment.

This decision was challenged in 1999 by the BALCO Employees
~
Union by filing a Writ Petition in the High Court of Delhi. The High Court
disposed of the Writ Petition on the basis of a mutual consent that advance
H intimation will be given to the employees before taking a final decision on
BALCO EMPLOYEES UNION (REGD.) v. U.O.l. 513
disinvestment. A

In June 2000, the Global Advisor issued global advertisements in
leading journals and newspapers calling for 'Expression of Interest' for
acquiring 51 % equity in BALCO. Eight companies expressed their inter-
est. The Global Advisor, in consultation with the Union of India, short-
listed three companies and requested them to submit their financial bids. B
Meanwhile, asset valuation of BALCO was do11e to fix reserve price of
51 % equity through a Valuer independently. the reserve price was fixed at
Rs. 514.40 crores. The highest bid of Rs. 551.50 crores was aceepted by the
Union of India. After passing a resolution in the Lok Sabha, a Sharehold-
ers Agreement and a Share-Purchase Agreement between Union of India C
and the highest bidder were signed as per the procedure for disinvestment.

A Writ Petition by the Employees' Union was filed in the High Court
of Delhi challenging the disinvestment of BALCO by the Union of India. A
Public Interest Litigation (PIL) was also filed in the same High Court.
Another Writ Petition was filed by an employee in the High Court of D
Chattisgarh. In the meantime, BALCO received notices from the State
Government authorities for alleged breach of various provisions of the
M.P. Land Revenue Code, 1959 and the Mining Concession Rules. BALCO
filed a Writ Petition under Article 32 of the Constitution of India before
this Court. The Writ Petitions filed before the High Courts were trans- E
ferred to this Court and all the cases were heard together.

Petitioner-Employees Union contended that BALCO is a State under
Article 12 of the Constitution of India and hence by disinvestment of
BALCO, the employees lost their rights and protection under Article 14
and 16 of the Constitution; and that the employees have a right to be heard F
before and during the process of disinvestment.

The State Government, besides supporting the contention of the
Employees Union contended that the implementation of the disinvestment
policy has failed to evoke a comprehensive package of socio-economic and
political reform towards implementation of the policy of disinvestment;
G
that it was not consulted by the Union of India in the process of disinvestment
and that it was prepared to offer a higher value than the one accepted; that
the Union of India had deviated from the recommendation of the Commis-
sion by disinvesting 51 % of the holding on the basis of a suggestion of the
Chairman of the Commission; that the method of valuation of the assets of H
514 SUPREME COURT REPORTS [2001] SUPP. 5 S.C.R.
A the company was faulty as some assets were not taken into considera.tion
for valuation and that the accepted offer viz., Rs. 551.50 crores did not
represent the correct value of 51 % equity along with controlling interest;
that the whole process of disinvestment lacked transparency; that the
'f
disinvestment decision defeats the provisions of the M.P. Land Revenue
Code, 1959 and goes against the fundamental basis on which the land was
B
acquired for the purpose of the company; that the land could not be
transferred to a non-tribal.

Public interest litigant, challenging the disinvestment, contended that
he had been closely connected with PSUs and therefore had the locus standi
c to file the Writ Petition.

Respondent-Union of India contended that tllte wisdom and advis-
ability of economic policies of a Government are not amenable to judicial
review; and that the challenge to the decision to disinvest on the ground
that it impairs public interest or that it was without any need to disinvest
D or that it was inconsistent with the decision of the Commission is unten-
able.

BALCO submitted that the entire rationale and process of
disinvestment before taking a final decision was explained to the employ·
ees; and that the various representations made by the Employees Union
E had been considered before finalising the disinvestment.

Dismissing the petitions, the Court

HELD : I.1. Process of disinvestment is a policy decision involving
complex economic factors. Courts have consistently refrained from inter-
F fering with economic decisions as it has been recognised that economic
expediencies lack adjudicative disposition and u"'less the economic deci-
sion, based on economic expediencies, is demonstr:ated to be so violative of
constitutional or legal limits on power or so abhorrent to reason, that
Courts would decline to interfere. In matters relating to economic issues,
G the Government has, while taking a decision, right to "trial and error" as
long as both trial and error are bona .fide and within limits of authority.
There is no case made out by the petitioner that the decision to disinvest in
BALCO is in any way capricious, arbitrary, illegal or uninformed.
[547-G-H; 548-A]

H 1.2. The policies of the Government ought Mt to remain static. With
BALCO EMPLOYEES UNION (REGO.) v. U.0.l. 515
the change in economic climate, the wisdom and the manner for the A
Government to run commercial ventures may require reconsideration.
What may have been in the public interest at a point of time may no longer
be so. 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
B
same parity of reasoning, the decision to disinvest also cannot be impugned
without showing that it is against any law or ma/a fide. [551 ·B·CJ

1.3. In a democracy, it is the prerogative of each elected Government
to follow its own policy. Often a change in Government may result in the
shift in focus or change in economic policies. Any such change may result c
in adversely affecting some vested interests. Unless any illegality is com-
mitted in the execution of the policy or the same is contrary to law or ma/a
fide, a decision bringing about change cannot per se be interfered with by
the Court. [572-F]
D
1.4. Wisdom and advisability of economic policies are ordinarily not
amenable to judicial review unless it can be demonstrated that the policy is
contrary to any statutory provision or the Constitution. In other words, it
is not for the Court to consider relative merits of different economic
policies and consider whether a wiser or better one can be evolved. For
testing the correctness of a policy, the appropriate forum is the Parliament E
and not the Court. Here the policy was tested and the Motion defeated in
the Lok Sabha on 1st March, 2001. [572-G-H]

1.5. In the case of a policy decision on economic matters, Courts
should be very circumspect in conducting any enquiry or investigation and F
must be most reluctant to impugn the judgment of the experts who may
have arrived at a conclusion unless the Court is satisfied that there is
illegality in the decision itself. [572-G· HJ

Rustom Cavasjee Cooper v. Union of India, [1970] 1 SCC 248 CB,
reWoo. G

Fertilizer Corporation Kamgar Union (Regd.), Sindri and Ors. v. Union
of India and Ors., [1981] 1 SCC 568; State o.f M.P. and Ors. v. Nandlal Jaiswal
& Ors., (1986] 4 SCC 566; G.B. Mahajan and Ors. v. Ja/gaon Municipal
Couµcil and Ors., [1991) 3 SCC 91; Peerless General Finance and Investment H
516 SUPREME COURT REPORTS [200 l] SUPP. 5 S.C.R.
A Co. Ltd. and Anr. v. Reserve Bank of India, [1992] 2 SCC 343; Premium
Granites and Anr. v. State of Tamil Nadu and Ors., [1994] 2 SCC 691; Delhi
Science Forum and Ors. v. Union of India and Anr., [!996] 2 SCC 405; R.K.
Garg v. Union of India and Ors., [1981] 4 SCC 675; M.P. Oil Extraction and
Anr. v. State ~f M.P. and Ors., [1997] 7 SCC 592; State ~f Pun;ab and Ors. v.
B Ram Lubhaya Bagga and Ors., [1998] 4 SCC 117; Bhavesh D. Parish and
Ors. v. Union of India and Anr., [2000] 5 SCC 471 and Nannada Bachao
Ando/an v. Union ~(India and Ors., [2000] 10 SCC 664, referred to.

2.1. The workers may have interest in the manner in which the
company is conducting its business as the policy decision may have an
c impact on the workers' rights, nevertheless it is an incidence of service for
an employee to accept a decision of the employer which has been honestly
taken and which is not contrary to law. Even a govemment servant, having
the protection of not only Articles 14 and 16 of the Constitution but also of
Article 311, has no absolute right to remain in service. Hence, non-govern·
D ment employees working in a company which by reason of judicial pro·
nouncement may be regarded as a State for the purpose of Part III of the
Constitution, cannot claim a superior or a better right than a government
servant and impugn its change of status. [548·B·D]

Ajay Hasia and Ors. v. Khalid Mujib Sehravardi and Ors., [1981] 1 SCC
E 722; Central Inland Willer Transport Corporation Ltd. and Anr. v. Brajo Nath
Ganguly and Anr.. [1986] 3 SCC 156; Bharat Petroleum (Erstwhile Burmah
Shell) Management Stq[f Pensioners v. Bharat Petroleum Corporation Ltd. and
Ors., [1998] 3 SCC 32, referred to.

F 2.2. The policy of disinvestment cannot be faulted if as a result
thereof the employees lose their rights or protection under Articles 14 and
16 of the Constitution. In other words, the existence of rights of protection
under Articles 14 and 16 of the Constitution cannot possibly have the
effect of vetoing the Government's right to disinvest. The employees can·
not claim a right of continuous consultation at different stages of the
G
disinvestment process. If the disinvestment process is gone through with·
out contravening any law, the normal consequences as a result of
disinvestment must follow. [548-G-H; 549-A]

State of Haryana v. Shri Des Raj San!(ar and Anr., [1976] 2 SCC 844,
,H relied on.
BALCO EMPLOYEES UNION (REGD.) "· U.0.1. 517
Southern Structural Staff Union v. Managemenl of Southern Structural A
Ltd. & Anr., (1994) 81 Comp. Cases 389, approved.

2.3. The Government could have run the industry departmentally or
in any other form. When it chooses to run an industry by forming a
company and it becomes its shareholder then under the provisions of the
Companies Act as a shareholder, it would have a right to transfer its B
shares. When persons seek and get employment with such a company
registered under the Companies Act, it must be presumed that they accept
the right of the directors and the shareholders to conduct the affairs of the
company in accordance with law and at the same time they can exercise
the right to sell their shares. As a result of disinvestment of 51 % of the c
shares of the company, the management and control, no doubt, has gone
into private hands. Nevertheless, it cannot, in law, be said that the em·
ployer of the workmen has changed. The employees continue to be under
the company and change of management does not in law amount to a
change in employment. [549-B·C]
D
2.4. The minutes of the meeting held between the Union of India and
.,
BALCO with the petitioner disclose that, in principle, the petitioner was not
against disinvestment but were concerned with their interest being suffi·
cientiy safeguarded. In. the Shareholders Agreement between the Union of
India and the Strategic Partner, it is provided that there would be no re· E
trenchment of any worker in the first year after the closing date and there·
after restructuring of the labour force, if any, would be implemented in a
manner recommended by the Board of Directors of the company. It further
mandates that in the event of reduction in the strength of its employees is
required, then it is to be ensured that the company offers its employees an
option to voluntarily retire on terms that are not in any manner less favour· F
able than the Voluntary Retirement Scheme offered by the company on the
date of the arrangement. Beside, BALCO undertook before this Court, that
it will not retrench any worker who is in the employment on the date of
takeover of the management by the Strategic Partner, other than any dis·
missal or termination of the worker(s) of the company from their employ- G
ment in accordance with the applicable staff regulations and standing or·
ders of the company or other applicable laws. [552-E-H; 553-A]

2.5. 'f!te workers' interest are adequately protected in the process of
disinvestment. The existing laws adequately protect workers' interest and
no decision affecting a huge body of workers can be taken without the prior H •
518 SUPREME COURT REPORTS [200 I] SUPP. 5 S.C.R.
A consent of the State Government. Further more, the service conditions are
governed by the certified order of the company and any change in the con-
ditions thereto can only be made in accordance with law. It is clear from the
facts that safeguarding the interest of the workers was one of the concerns
of the Government. Representations had been received from the Trade Union
leaders and effort was macje to try and ensure that the process of disinvestment
B
did not adversely affect the workers. [553-B; 556-B]

2.6. It will not be open to a Court to consider whether there has been
a gross failure to evolve comprehensive package towards implementation
of the policy on disinvestment. In the process of disinvestment, it is evident
C that the Union of India was aware of the interest of the workers and
employees as a class. It was precisely for this reason that safeguards were
inserted in the Shareholders Agreement. These terms were incorporated in
the agreement after the demands of BALCO employees were considered
by the Union of India. (558-A; B]

D 3.1. In taking policy decision in economic matters at length, princi-
ples of natural justice have no role to play. While it is expected of a
responsible employer to take all aspects into consideration including wel-
fare 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
E the taking of the decision. [548-D-E]

3.2. Merely because the workmen may have protection of Articles 14
and 16 of the Constitution, °by regarding BALCO as a State, it does not
mean that the erstwhile sole. shareholder viz., Government had to give the
workers prior notice of hearing before deciding to disinvest. There is no
F principle of natural justice which requires prior notice and hearing to
persons who are generally affected as a class by an economic policy deci-
sion of the Government. However, it is the case of the Union of India that
the workers had been fully informed about the process of disinvestment
through an ongoing dialogue. [548-F]
G
3.3. Employees of the company may have an interest in seeing as to
how the company is managed, bnt it is unacceptable that in the process of
disinvestment, the principles of natural justice would be applicable and
that the workers, or for that matter any other party having an interest
therein, would have a right of being heard. For good goveranance and
H
BALCO EMPLOYEES UNION (REGD.) v. U.0.1. 519
administration whenever such policy decisions are taken, it is desirable A
that there shonld be wide range of consnltations including considering any
representations which may have been filed, but there is no provision in law
which would require a hearing to be granted before taking a policy deci-
sion. In exercise of executive powers, policy decisions have to be taken
from time to time. It will be impossible and impracticable to give a formal
B
hearing to those who may be affected whenever a policy decision is taken.
One of the objects of giving a hearing in application of the principles of
natural justice is to see that illegal action or decision does not take place.
Auy wrong order may adversely affect a person and it is esssentially for
this reason that a reasonable opportunity may have to be granted before
passing of an administrative order. In case of the policy decision, however, c
it is impracticable, and at times against the public interest, to do so, but
this does not mea.n that a policy decision which is contrary to law cannot be
challenged. Not giving the workmen an opportunity of being heard cannot
per se be a ground of vitiating the decision. If the decision is otherwise
illegal as being contrary to law or anyConstitutional provision, the persons D
affected like the workmen, can impugn the same, bot not giving a pre
decisional hearing cannot be a ground for quashing the decision. [556-C-F]

3.4. In judicial proceedings where rights are likely to be affected, prin-
ciples of natural justice would require the Court to give a hearing to the
party against whom an adverse or unfavourable order may be passed. No E
judicial or quasi-judicial functions are exercised by the Government when it
decides, as a matter of policy, to disinvest shares in a Public Section Under-
taking. While it may be fair and sensible to consult the workers in a situation
of change of management, there is, however, in law no such obligation to
consult in the process of sale of majority shares in company.(557-B-D] F

National Textile Workers' Union and Ors. v. P.R. Ramakrishnan, (1983]
I
1 sec 228, distinguished.

Pm.f. Babu Mathew and Ors. v. Union of India and Ors., (1997] 90
Company Cases 455, approved.
G

4. The grievance of alleged non-consultation of the State Govern-
ment in the process of disinvestment of BALCO is a matter between the
State Government and the Union of India and such grievance cannot be
raised by the State against the Union of India in the proceedings initiated H
520 SUPREME COURT REPORTS [2001] SUPP. 5 S.C.R.
A by the workmen before the Court. However, it is unbelievable that during
the entire process of disinvestment of BALCO, the State Government was
oblivious of what was happening.· Wide publicity was given at various
stages in connection with the disinvestment. It was after doe pnblicity a
Global Adviser was appointed and thereafter advertisement was issued in
an effort to select the Strategic Partner. The whole process of disinvestment
B
of BALCO took place over a period of about two years. The issue was even
debated by members in the Lok Sabha. There wa~ nothing to prevent the
State Government at any stage prior to the selection of the Strategic
Partner, either to forward its views or a representation or even to make an
offer of buying the 51 % of the shares which were being sold. Once
c Sharesholders' Agreement has been signed, the offer of the State Govern-
ment to buy 51 % equity shares in the company for a higher value of
Rs. 551.41 crores would be of no ronsequence. This offer did not see the
light of the day till the start of the litigation. [558-D-GJ

5. The Chairman of the Commission requested the Government to
D
consider strategic sale of 51 % or more of the equity instead of the recom-
mendation of the Commission for sale of only 40 % of the equity. From the
facts, it is not possible to accept the contention that the Union of India
deviated from the advise given by the Disinvestment Commission. The
advice of the Commission was not binding on the Union of India. Further,
E the terms of reference and the provisions contained in the Resoloution
which required the disinvestment under the supervision of the Commission
and the Commission advising the Government on matters like considera-
tion of the interests of the stake-holders, workers, consumers etc., were
deleted by the subsequent Resolution. The Commission became only an
F advisory or recommendatory body. The acceptance of the advice by the
Government and corning to the conclusion that sale of 51 % or more of the
equity of BALCO along with transfer of management would secure a
better price than the sale of only 40% cannot be regarded as unwarranted,

-
illegal or arbitrary. [559-G-H; 560-A-C]

G 6.1. It is not for this Court to consider whether the reserve price
fixed by the Valuer at Rs. 514.5 crores was correct or not. What has
to be seen in exercise of judicial review of administrative action is to
examine whether proper procedure has been followed and whether the
reserve price which was fixed is arbitrarily low and on the face of it,
H unacceptable. [560-F]
BALCO EMPLOYEES UNION (REGD.) v. U.0.1. 521
6.2. Assets including shares can be sold in a number of ways, i.e., by A
public auction, tenders or sealed offers or by negotiations. The exercise which
was undertaken to appoint a Valuer and to get a value of this controlling
interest of 51 % of the shares was presumably to arrive at the reserve price.
What the assets will fetch, is ultimately reflected in the offer which is
received.The bidders at the time offurnishing their bids did not know what
B
will be the reserve price which had to be fixed. It is only after the receipt of
the bids that the reserve price was made known. The perception in the mar-
ket, therefore, clearly was that 51 % shares of BALCO along with its man-
agement was not worth more than Rs. 550.5 crores. Under the circumstances,
when the Union of India had decided to disinvest in BALCO by acepting a
bid far in excess of the reserve price which was fixed by the Valuer, the said C
decision cannot, under any circumstances, be faulted. Whether the reserve
price should have been 514.4 crores or more appears to be immaterial when
the best price which has been offered for the sale of 51 % stake in BALCO
after global advertisement was only Rs. 551.5 crores. There is no suggestion
that there was any other company or Institution which had or could offer D
more than the said sum. When proper procedure has been followed and an
offer Is made of a price more than the reserve price then there is no basis for
this Court to conclude that the decision of the Government to accept the
highest offer is in any way vitiated. [560-G-H; 561-A-E]

6.3. The offer of the highest bidder was more than the reserve price E
which was arrived at by a method which is well recognised. Further,
valuation is a question of fact and Court will not interfere in matters uf
valuation unless the methodology adopted is arbitrary. [573-C]

Duncans lndusrtries Ltd. v. State of U.P. and Ors., [2000] I SCC 633,
F
relied on.

7 .1. Transparency does not mean the conducting of Government busi-
ness while sitting on the cross roads in public. Transparency would require
that the manner in which decision is taken is made known. Persons who are
to decide are not arbitrarily selected or appointed:The selection of the Glo- G
bal Adviser and the Strategic Partner was through the process of issuance of
global advertisement. It is the Global Adviser who selected the Valuer who
was already on the list of valuers maintained by the Government. Whatever
material was received was examined by a High Power Committee and the
ultimate d~cision was taken by the Cabinet Committee on Disinvestment. To H

\
522 SUPREME COURT REPORTS [2001] SUPP. 5 S.C.R.
A say that there has been lack of transparency, under these circumstances, is
uncharitable and without any basis. [561-G-H; 562-A]

7.2. The facts show that fair, just and equitable procedure has been
followed in carrying out this disinvestment. The allegations of lack of
transparency or that the decision was taken in a hurry or there has been an
B arbitrary exercise of power are without any basis. It is a matter of regret
that the State Government has been making such allegations against the
Union of India without any basis. This Court strongly deprecates snch
unfounded averments made by an officer of the State. [573-A-B]

c 8. The giving of land to BALCO on lease was clearly permissible
under the provisions of the M.P. Land Revenue Code, 1959 as it stood then.
It is too late after 25 years when the last permission was granted to hold
that becaues of the disinvestment, it must be presumed that there is a
transfer of land to the non-tribal in the year 2001 even though the land
continues to reamin with BALCO to whom it was originally transferred.
D The change of management or in the shareholding does ot imply that there
is transfer of land from one company to another. If the original grant of
lease of land and permission to transfer in favour of BALCO between the
years 1968 and 1972 was valid, then, it cannot now be contended that there
has been another transfer of land with the Government having reduced its
E stake to 49%. Even if BALCO had been a non-public sector undertaking,
the transfer of land to it was not in violation of the Land Revenue Code.
The land was validly given to BALCO a number of years ago and today it
is not open to tM State Government to take a summersault and challenge
the correctness of its own action. Furthermore even with the change in
management the land remaius with BALCO to whom it had been validly
F
given on lease. [564-E-H]

Samatha v. State ()f A.P. and Ors., [1997] 8 SCC 191, distinguished.

9.1. Public Interest Litigation (PIL) is not a pill or a panacea for all
wrongs. It was essentially meant to protect basic human rights of the weak
G
and the disadvantaged and was a procedure which was innovated where a
public spirited person files a petition in effect 011 behalf of such persons
who on account of poverty, helplessness or economic and social disabilities
could not approach the Court for relief. There have been, in recent times,
increasing instances of abuse of PIL. [566-F]
H
BALCO EMPLOYEES UNION (REGD.) v. U.0.1. 523
9.2. PIL was not meant to be a weapon to challenge the financial or A
economic decisions which are taken by the Government in exercise of their
administrative power. A person personally aggrieved hy any such decisii;n,
which he regards as illegal, can impugn the same in a Court of law, but, a
PIL at the behest of a stranger ought not to be entertained. Such a litiga·
tion cannot perse be on behalf of the poor and the downtrodden, unless the
B
Court is satisfied that there has been violation of Article 21 and the
persons adversely affected are unable to approach the Court. 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 busy-body cannot fall within the parameters of
PIL. [571-G-H; 572-A] c
9.3. 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. Every matter in
D
public interest or curiosity cannot be the subject matter of PIL.'Courts are
not intended to and nor should they conduct the administration of the coun-
try. Courts will interfere only if there is a clear violation of Constitutional or
statutory provisions or non-compliance by the State with its Constitutional
or statutory duties which is not so in the present case. [573-E-G]
E
9.4. No ex-parte relief by way of injunction or stay especially with
respect to public projects and schemes or economic policies or schemes
should be granted. It is only when the Conrt is satisfied for good and valid
reasons, that there will be irreparable and irretrievable damage an injunc-
tion should be issued after hearing all the parties. Even then the Petitioner
F
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. It is in public interest that there should be early
disposal of cases. PIL should, therefore, be disposed of at the earliest as
any delay will be contrary to public interest and thus become counter-
productive. [574-A-C] G

S.P. Gupta v. Union qf India and Anr., [1981] Supp. SCC 87; Sachidanand
Pandey and Anr. v. State of West Bengal and Ors., [1987] 2 SCC 295; Subhash
Kumar v. State qf Bihar and Ors., [1991] 1 SCC 598; Janata Dal v. H.S.
Chowdhary and Ors., [1992] 4 SCC 305; Raunaq International Ltd. v. I. V.R. H

'
524 SUPREME COURT REPORTS [200 I] SUPP. 5 S.C.R.
A Construction Ltd. and Ors., [1999] l SCC 492 and Narmada Bachao Ando/an
v. Union of India and Ors., [2000] 10 SCC 664, referred to.

10. With regard to the .writ petition filed nnder Article 32 of the
Constitntion by BALCO challenging various show canse notices issned by
the State Government anthorities for alleged breach of varions provisious
B of Land Revenne Code and Mining Concession Rules, the company has
adequate alternative remedy under the enactments under which the no-
tices had b~en issued and, in appropriate case, can approach the High
Court under Article 226 of the Constitution. [572-D]

C CIVIL ORIGINAL JURISDICTION : Transferred Case (C) No. 8 of
2001.

WITH

T.C. (C) Nos. 9 and IO of 2001 and W.P. (C) No. 194 of 2001.

D Soli J. Sorabjee, Attorney General, Harish N. Salve, Solicitor General,
Dipankar P. Gupta, G.L. Sanghi, C.A. Sunc'!farn, P. Chidambararn, Anoop G.
Chaudhary, Ranjit Kumar, Dr. A.M. Singhvi, Jaideep Gupta, Sanjay Sen, Rana
S. Biswas, Ms. Sheetal Sharma, Sitesh Mukherjee, Ms. Indra Sawhney, S.S.
Ray, Ms. Rakhi Ray, Ms. P.S. Shroff, Ms. Ritu Bhalla, Sidharth Datta, Manish
E Singhvi, Ankur Talwar, Maninder Singh, Ms. Pratibha M. Singh, Ms. Kavita
Wadia, Siddharth Goswami, Siddharth Chowdhury, B. V. Bairam Das, Rajiv K.
Garg, Annam D.N. Rao, Ravindra Shrivastava, Ad vs. General for Chhattisgarh,
Prakash Shrivastava, Piyush Dharmadhikari, Ms. Suparna Shrivastava, Harsh
Verma, R.M. Sharma, Sanjay Parikh, R.R. Chandrachud, Arun Beriwal, Sudhir
F Walia, Mahinder Singh Dahiya, Jaideep Gupta, Shahid Rizvi and Ms. Sarla
Chandra for the appearing parties.

In-person for the Petitioner in T.C. (C) No. 9/2001.

The Judgment of the Court was delivered by
G KIRPAL, J. The validity of the decision of the Union of India to
disinvest and transfer 51 % shares of M/s Bharat Aluminium Company Limited
(hereinafter referred to as 'BALCO') is the primary issue in these cases.

BALCO was incorporated in 1965 as a Government of India Undertak-
H ing under the Companies Act, 1956. Prior to its disinvestment it had a paid-

,
BALCO EMPLOYEES UNION (REGO.) v. U.0.1. [KIRPAL, J.] 525
up share capital of Rs. 488.85 crores which was owned and controlled by the A
Government of India. The company is engaged in the manufacture of alu-
minium and had plants at Korba in the State of Chhattisgarh and Bidhanbag
in the State of West Bengal. The Company has integrated aluminium manufac-
turing plant for the manufacture and sale of aluminium metal including wire
rods and semi-fabricated products. B

The Government of Madhya Pradesh vide its letter dated 18th March,
1968 wrote to BALCO stating that it proposed that land be granted to it on a
99 years lease subject to the terms and conditions contained therein. The letter
envisaged giving on lease Government land on payment of premium of Rs. 200
per acre and, in addifon thereto also to provide tenure land which was to be c
acquired and transferred on lease to BALCO on payment by it the actual cost
of acquisition plus annual lease rent. Vide its letter dated 13th June, 1968
BALCO gave its assent to the proposal contained in the aforesaid letter of 18th
March, 1968 for transfer of land to it. BALCO intimated by this letter that the
total requirement of land would be about 1616 acres. Thereafter, in addition D
to the Government land which was transferred, the Government of Madhya
Pradesh acquired land for BALCO under the provisions of the Land Acquisi-
tion Act, 1894 on payment of compensation. The District Collector, Bilaspur
also granted permission under Section 165(6) of the M.P. Land Revenue Code,
1959 for acquiring/transferring private land in favour of BALCO. As a result E
of the aforesaid, BALCO set up it's establishment on it's acquiring land from
and with the help of the State Government.

Since 1990-91 successive Central Governments had been planning to
disinvest some of the Public Sector Undertakings. In pursuance to the policy
of disinvestment by a Resolution dated 23rd August, 1996 the Ministry of F
Industry (Department of Public Enterprises) Government of India constituted
a Public Sector Dis-investment Commission initially for a period of three years.
The Resolution stated that this Commission was established in pursuance of the
Common Minimum Programme of the United Front Government at the Centre.
The Commission was an independent, non-statutory advisory body and was G
headed by Shri G. V. Ramakrishna who was to be its Full-time Chairman. The
Commission had four p]llt-time Members. Paras 3, 4 and 5 of the said Reso-
Jution are as follows:-

"3. The broad terms of reference of the Commission are as follows:- H
526 SUPREME COURT REPORTS [2001] SUPP. 5 S.C.R.

A I. To draw a comprehensive overall long term disinvestment pro-
gramme within 5-10 years for the PSUs referred to it by the Core
Group.

II. To determine the extent of disinvestment (total/partial indicating
percentage) in each of the PSU.
B
III. To prioritise the PSUs referred to it by the Core Group in terms
of the overall disinvestment programme.

IV. To recommend the preferred mode(s) of disinvestment (domestic
capital markets/international capital markets/auction/private sale
c to identified investors/any other) for each of the identified PS Us.
Also to suggest an appropriate mix of the various alternatives
taking into account the market conditions.

v. To recommend a mix between primary and secondary
disinvestments taking into account Government's objective, the
D
relevant PSUs funding requirement and the market conditions.

VI. To supervise the overall sale process and take decisions on
instrument, pricing, timing, etc. as appropriate.

VIL To select the financial advisers for the specified PSUs to facilitate
E the disinvestment process.

VIII. To ensure that appropriate measures are taken during the
disinvestment process to protect the interests of the affected
employees including encouraging employees' participation in
F the sale process.

IX. To monitor the progress of disinvestment process and take nec-
essary measures and report periodically to the Government on
such progress.

X. To assist the Government to create public awareness of the
G
Government's disinvestment policies and programmes with a
vi~w to developing a commitment by the people.

XL To give wjde publicity to the disinvestment proposals so as to
ensure larger public participation in the shareholding of the
H enterprises; and
BALCO EMPLOYEES UNION (REGD.) v. U.0.1. [KIRPAL, J.] 527
XII. To advise the Government on possible capital restructuring of A
enterprises by marginal investments, if required, so as to ensure
enhanced realisation through disinvestment.

4.The Disinvestment Commission will be advisory· body and the
Government will take a final decision on the companies to bedisinveste<l
and mode of disinvestment on the basis of advice given by the
B
Disinvestment Commission. The PSUs would implement the decision
of the Government under the overall supervision of the Disinvcsnnent
Commission.

5.The Commission while advising the Government on the above matters C
will also take into consideration the interests of stakeholders, workers,
consumers and others having a stake in the relevant public sector
undertakings."

It may here be noted that by a Resolution dated 12th January, 1998 the
earlier Resolution of 23rd August, 1996 was partly modified with deletion of D
paras 3, 4 and 5 and by substitution of the same by the following:

"3(i) The Disinvestment Commission shall be an advisory body and
its role and function would be to advise the Government on
Disinvestment in those public sector units that are referred to it E
by the Government.

3(ii) The Commission shall also advise the Government on any other
matter relating to disinvestment as may be specifically referred
to it by the Government, and also carry out any other activities
relating to disinvestment as may be assigned to it by the Govern- F
ment.

3(iii) In making its recommendations, the Commission will also take
into consideration the interests of workers, employees and others
stake holders, in the public sector unit(s). G

3(iv) The final decision on the recommendations of the Disinvestment
Conunission \.Viii vest with the Government."

According to the Union of India it laid down the broad procedures to
be followed for processing the recommendations of the Disinvestment Com- H
528 SUPREME COURT REPORTS [2001] SUPP. 5 S.C.R.
A mission. It was, inter alia, decided that:

i. the Ministry of Finance (now Department of Dis-investment)
would process the recommendations of the Dis-Investment Com-
mission, by inviting comments from the concerned administra-
tive machinery;
B
ii. submit the recommendation to the Core Group of Secretaries for

iii.
Dis-investment for consideration;

The recommendations of the Core Group of Secretaries would
...
then be taken to the Cabinet for decision;
c
iv. It was also decided that the Core Group of Secretaries would be
headed by the Cabinet Secretary and its permanent members
would be Finance Secretary, Revenue Secretary, Expenditure
Secretary, Secretary Department of Public Enterprises, Secretary
D Planning Commission and Chief Economic Advisor, Ministry of
Finance, and

v. to implement the decisions, an Inter-Ministerial Group headed by
the Secretary/Joint Secretary of the Administrative Ministry and
consisting of Joint Secretaries of Department of Economic Af-
E fairs, Department of Public Enterprises, alongwith the Chairman
and Managing Director of the Companies as Members and Di-
rector (Finance) of the company as the Convenor. In case of
BALCO, the !MG consisted of Secretary level Officers and was
headed by Secretary (Mines).
F
On 10th December, 1999 the Department of Disinvestment was set up
and the responsibilities which were earlier assigned lo the Ministry of Finance
have now been transferred to this Department.

The Disinvestment Commission in its 2nd Report submitted in April,
G 1997 advi;ed the Government of India that BALCO needed to be privatised.
The recorrunendation which.it made was that the Government may immediately
disinvest its holding in the Company by offering a significant share of 40% of
the equity to a strategic partner. The Report further advised that there should
be an agreement with the selected strategic partner specifying that the Govern-
H ment would within two years make a public offer in the domestic market for
• BALCO EMPLOYEES UNION (REGD.) v. U.0.1. [KIRPAL, J.] 529
further sale of shares to institutions, small investors and employees thereby A
bringing down its holding to 26%. The Commission also recommended that
there should be an on-going review of the situation and the Government may
disinvest its balance equity of 26% in full in favour of investors in the domestic
market at the appropriate time. The Commission had recommended the ap-
pointment of a Financial Advisor to undertake a proper valuation of the com- B
pany and to conduct the sale process. The Commission had categorised BALCO
as a non-core group industry.

The Chairman of the Disinvestment Commission wrote a letter dated
12th June, 1998 to the Secretary, Min.istry of Mines, Government of India
drawing the Government's attention to the recommendations of the Commis- c
sion for sale of 40% of equity in BALCO and to bringing down of the
Government holding to 26% within two years. This letter then referred to the
5th Report of the Commission wherein it had reviewed the question of strategic
sale and had suggested that the Government may keep its shareholding below
the level of investment being offered by the strategic buyer and its divesting D
some portion of equity to other entities. This letter noted that in these circum-
stances, it may be difficult to get in a multilateral financial institution to act fast
in laking up shares of BALCO. The Chairman of the Commission then recom-
mended that "in keeping with the spirit of the recommendations qf the 5th
Report, you may now kindly consider offering 51% or more to the strategic E
buyer along with tran~fer qf management. This sale will enable a smooth
transaction with the participation qf more bidders and better price for the
shares. This will also be in keeping with the current policy as announced by
the FM in his recent budget speech".

The Cabinet Committee on Economic Affairs had, in the meantime, in F
September 1997 granted approval for appointment of a technical and financial
advisor, selected through a competitive process, for managing the strategic sale
and restructuring of BALCO. Global advertisement was then issued inviting
from interested parties Expression of Interest for selection as a Global Advisor.
The advertisement was published in four financial papers in India and also in G
'The Economist', a renowned financial magazine published abroad. Eight
Merchant Banks showed their interest in appointment of the Global Advisor.
The lowest bid of Mis Jardiae Fleming Securities India Ltd. was accepted and
approved by the Cabinet Committee on Disin~estment on 9th March, 1999.
The Cabinet Committee on Disinvestment also approved the proposal of stra- H
530 SUPREME COURT REPORTS (2001] SUPP. 5 S.C.R.
A tegic sale of 51 % equity in respect of BALCO.

The .decision of the Government to the aforesaid strategic sale was
challenged by the BALCO Empioyees' Union by filing Writ Petition No. 2249
of 1999 in the High Court of Delhi. This petition was disposed of by the High
Court vide its order dated 3rd August, 1999.
B
On 3rd March, 2000, the'Union Cabinet approved the Ministry of Mines'
proposal to reduce the share capital of BALCO from Rs. 488.8 crores to Rs.
244.4 crores. This resulted in cash flow of Rs. 244.4 crores to the Union
Government in the Financial Year 1999-2000.
c A formal Agreement between Jardine Fleming, the Global Advisor and
the Government of India was executed on 14th June, 2000. The scope of work
of the Global Advisor, inter alia, included the development, updating and
review of a list of potential buyers of the stake; preparing necessary documents;
assisting the Government of India in sale negotiations with potential buyers and
D to advise on the sale price; to coordinate and monitor the progress of the
transaction until its completion.

Thereafter, on 16th June, 2000 the Global Advisor, on behalf of the
Government of India, issued an advertisement calling for "Expression of ln-
E terest" in leading journals and newspapers such as the Economist, London, the
Mining Journal, London, the Economic Times, India, Business Standard, India
and the Financial Express, India. The invitation was to Companies and Joint
Ventures which may be interested in acquiring 51 % shares of the Government
of India in BALCO. The last date for submitting the expression of interest was
30th June, 2000 and the interested companies were required to submit their
F expression of interest together with their Audited Annual Reports and a profile
describing their business and operations.

Eight companies submitted their Expression of Interest. These compa-
nies were as follows:
G "i. · Sterlite Industries (India) Ltd.

ii. Hindlaco Industries Ltd.

111. Tranex Holding Inc.

H iv. Indian Minerals Corporation Pie.
BALCO EMPLOYEES UNION (REGD.) v. U.0.1. [KIRPAL, J.] 531
v. VAW Aluminium AG, Germany A
vi. ALCOA, USA

vii. Sibirsky, Russia

viii. MALCO" B
Mis Jardine Fleming, Global Advisor made an analysis of the various
" bids on the basis of the financial and technical capability, familiarity with India
and overall credibility. Thereupon two companies, namely, Indian Minerals
Corporation Pie. And Tranex Holding Inc. were rejected. The Inter-Ministerial
Group (hereinafter referred to as !MG) set up by the Union of India, accepted C
the expression of interest of six out of eight parties and it also decided that the
bids of Sterlite and MALCO be treated as one. Thus there remained five
prospective bidders but two, namely, VAW Aluminium AG, Germany and
Sibirsky, Russia dropped out and the remaining three, namely, ALCOA, USA,
Hindalco and Sterlite conducted due diligence (inspection) on BALCO be- D
tween September to December, 2000.

The !MG considered the drafts of the Shareholders' Agreement and the
Share Purchase Agreement and had discussions with three prospective bidders
and ultimately the said drafts were finalised on I Ith January, 2001.
E
For the purpose of carrying out the asset valuation of BALCO, the
Global Advisor short listed four parties from the list of Registered Government
Valuers approved by the Income-Tax Department. On 18th January, 200 l,
BALCO invited quotations from the four Registered Valuers, so short listed,
and the quotation of Shri P.V. Rao was accepted. Shri P.V. Rao was a registered F
valuer of immovable property and bis team mates were Government Registered
Valuers authorised to value plant and machinery. They were assisted in the
work of valuation by officers of the Indian Bureau of Mines for assessing the
value of existing mines. Pending the receipt of the valuation report from Shri
P.V. Rao, the Global Advisor on 8th February, 2001 requested the three bidders
to submit their financial bids along with other necessary documents by ·15th
G
February, 2001, which was later extended by one day. On 14th February, 2001
Shri P.V. Rao submitted his asset valuation report to Mis Jardine Fleming.

On 15th February, 2001, an Evaluation Committee headed by the Addi-
tional Secretary (Mines) was constituted: This Committee was required to fix H
532 SUPREME COURT REPORTS [2001] SUPP. 5 S.C.R.
A the reserve price of 51 % equity of BALCO which was to be sold to the strategic
party. The three contenders, namely, Alcoa, Hindalco and Sterlite Industries
Ltd. submitted their sealed bids to the Secretary (Mines) and Secretary
(Disinvestment) on 16th February, 2001. It is thereafter, that Mis Jardine
Fleming presented its valuation report together with the asset valuation done
B by Shri P.V. Rao to the Eva!Uation Committee to work out the reserve price.

The range of valuation of BALCO that emerged on various methodolo-
gies was as follows:-

(i) Discounted Cash How -Rs. 651.2 994. 7 crores

c (ii) Comparables -Rs. 587 909 crores

(iii) Balance Sheet -Rs. 597.2 681.9 crores

Thus, the range of valuation by all these methods came between Rs. 587
and Rs. 995 crores for 100% of the equity. Ipso facto, for 51 % of the equity,
D the range of valuation came mil as Rs. 300 to Rs. 507 crores. The Evaluation
Committee then deliberated on the various methodologie~ and concluded, as
per the affidavit of the Union of India, that the most appropriate methodology
for valuing the shares of a running business of BAI.CO would be the Dis-
counted Cash Flow method. It decided to add a control premium of 25% on
E the base value of equity (although the Advisor had viewed that the premium
should range between 10-15%) and then add the value of non-core assets to
arrive at a valuation of Rs. 1008.6 crores for the company as a whole, 51 % of
which amounts to Rs. 514.4 prores which was fixed as .the Reserve Price.
According to the respondents,,the Evaluation Committee felt that Asset Valu-
ation Report appeared to have over-valued the fixed assets of the company at
F
Rs. 1072.2 crores. The Committee further observed that the fixed asset valu-
ation method was only a good indicator of the value that could be realised if
the business was to be liquidated, rather than for valuing the business as a going
concern. Furthermore, the asset valuation method did not take into account the
liabilities and contingent liability that go with the business.
G
When the financial bids were opened, it was found that the bid of Sterlite
Industries was the highest at Rs. 551.5 crores, the bid of Hindalco was Rs. 275
crores while ALCOA had opted .out. The report of the Evaluation Committee
for acceptance of the bid which was higher than the reserve price was consid-
H ered by the !MG which recommended the acceptance of the bid of Sterliie
BALCO EMPLOYEES UNION (REGD.) v. U.0.1. [KIRPAL, l.] 533
Industries to the core group of Secretaries. This core group in turn made its A
recommendation to the Cabinet Committee on Disinvestment which on 21st
February, 2001 approved/accepted the bid of Sterlite Industries at Rs. 551.5
crores. The Government's decision was communicated to Sterlite Industries on
that date. The announcement of the decision to accept the bid of Sterlite
Industries led to the initiation of legal proceedings challenging the said deci- B
sion. On 23rd February, 2001, Dr. B.L. Wadhera filed Civil Writ Petition No .
.. 1262 of 2001 in the Delhi High Court. This was followed by Writ Petition No.
1280 of 2001 filed by the employees of BALCO on 24th February, 2001 also
in the High Court of Delhi. On that very date, i.e., on 24th February, 2001
another employee of BALCO, namely, Mr. Samund Singh Kanwar filed Civil
Writ Petition No. 241 of 2001 in the High Court of Chhattisgarh.
c
While the aforesaid writ petitions were pending there was a Calling
Attention Motion on Disinvestment with regard to BALCO in the Rajya Sabha.
Discussions on the said motion took place in the Rajya Sabha on 27th February,
2001 and the matter was discussed in the Lok Sabha on 1st March, 2001. The 'D
motion "that this House disapproves the proposed disinvestment of Bharat
Aluminium Company Ltd." was defeated in the Lok Sabha by 239 votes to 119
votes. Soon thereafter on 2nd March, 200 I, Shareholders Agreement and Share
Purchase Agreement between the Government of India and Sterlite Industries
Limited were signed. Pursuant to the execution of sale; 51 % of the equity was
E
transferred to Sterlite Industries Limited and a cheque for Rs. 551.5 crores was
received. It is not necessary to refer to the terms of the agreement in any great
detail except to notice a few clauses which pertain to safeguarding the interest
of the employees of the company. Clauses H and J of the preamble reads as
follows:
F
"H. Subject to Clause 7.2, the Parties envision that all employees of
the Company on the date hereof shall continue in the employ-
ment of the Company.

J. The SP recognises that the Government in relation to its employ-
ment policies follows certain principles for the benefit of the G
members of the Scheduled Caste/Scheduled Tribes, physically
handicapped persons and other socially disadvantaged catego-
ries of the society. The SP shall use its best efforts to cause the
Company to provide adequate job opportunities for such per-
sons. Further, in the event of any reduction in the strength of the H
534 SUPREME COURT REPORTS [2001] SUPP. 5 S.C.R.
A employees of the Company, the SP shall use its best efforts to
ensure that the physically handicapped pers0ns are retrenched at
the end."

Clause 7.2 which contains the Representations, Warranties and Cov-
enants of Mis Sterlite Industries is as follows:
B
''The SP represents and warrants to and covenants with each of the ..
Government and the Company that:

(a) It has been duly incorporated or created and is validly subsisting
and in good standing under the laws of the jurisdiction indicated
c
in the preamble to this Agreement;

(b) it has the corporate power and authority to enter into and perform
its obligations under this Agreement;

D (c) this Agreement has been duly authorised, executed and delivered
by it and constitutes a valid and binding obligation enforceable
against it in accordance with its terms;

(d) it is not a party to, bound or affected by or subject to any
indenture, mortgage, lease agreement, instrument, charter or by-
E law provision, statute, regulation, judgment, decree or law which
would be violated, contravened, breached by or under which
default would occur or under which any payment or repayment
would be accelerated as a result of the execution and delivery of
this Agreement or the consummation of any of the transactions
F provided for in this Agreement.

(e) Notwithstanding anything to the contrary in this Agreement, it
shall not retrench any part of the labour force of the Company
for a period ~fone (!)year from the Closing Date other than any
dismissal or termination ofemployees of the Company from their
G employment in accordance with the applicable staff regulations
and standing orders of the Company or applicable Law; and

(f} Notwithstanding anything to the contrary in this Agreement, but
subject to sub-clause (e) above, any restructuring of the labour
H force of the Company shall be implemented in the manner rec-
BALCO EMPLOYEES UNION (REGO.) i: U.0.1. [KIRPAL, J.] 535
ommended by the Board and in accordance with all applicable A
Jaws.

(g) Notwithstanding anything to the contrary in this Agreement, but
subject to sub-clause (e) above, in the event of any reduction of
the strength of the Company's employees the SP shall ensure that
the Company offers its employees, an option to voluntarily retire .B
on terms that are not, in any manner, less favourable than the
voluntary retirement scheme offered by the Company which is
referred to in Schedule 7.4 of the Share Purchase Agreement; and

(h) It shall vote all the voting equity shares of the Company, directly C
or indirectly, held by it to ensure that all provisions of this
Agreement, to the extent required, are incorporated in the Com-
pany's articles of association."

With the filing of the writ petitions in the High Court of Delhi and in the
High Court of Chhattisgarh, an application for transfer of the petitions was filed D
by the Union of India in this Court. After the notices were issued, the company
received various notices from the authorities in Chhattisgarh for alleged breach
of various provisions of the M.P. Land Revenue Code and the Mining Conces-
sion Rules. Some of the notices were not only addressed to the company but
also to individuals alleging violation of the provisions of the code and the rules E
as also encroachment having taken place on Government land by BALCO. This
led to the filing of the Writ Petition No. 194 by BALCO in this Court, inter
alia, challenging the validity "of the said notices. During the pendency of the
writ petition, the workers of the company went on strike on 3rd March, 2001.
Some interim orders were passed in the transfer petition and subsequently on F
9th May, 2001 the strike was called off. By Order dated 9th April, 2001, the
writ petitions which were pending in the High Court of Delhi and Chhattisgarh
were transferred to this Court being Transfer Case No. 8 of 2001 which pertains
to the writ petition filed by BALCO Employees' Union; Transfer Case No. 9
of 2001 pertains to the writ petition filed by Dr. B.L. Wadhera in the Delhi High
G
Court and Transfer Case No. 10 of2001 is the writ petition filed by Mr. Sarnund
Singh Kanwar in the High Court of Chhattisgarh.

On behalf of the BALCO Employees' Union, Shri Dipankar P. Gupta,
learned senior counsel submilted that the workmen have been adversely af-
fected by the decision of the Government of India to disinvest 51 % of the H
536 SUPREME COURT REPORTS [2001] SUPP. 5 S.C.R.
A shares in BALCO in favour of a private party. He contended that before
disinvestment, the entire paid-up capital of BALCO was owned and controlled
by the Government of India and it's administrative control co-vested in the
Ministry of Mines. BALCO was, therefore, a State within the meaning of
Article 12 of the Constitution. Reliance for this was placed on Ajay Hasia and
B Others v. i)halid Mujib Sehravardi and Others, [1981] 1 SCC 722; Central
Inland Water Transport Corporation limited and Another v. Brojo Nath Ganguly
and Another, [1986] 3 SCC 156. He also contended that by reason of
disinvestment the workmen have lost their rights and protection under Articles
14 and 16 of the Constitution. This is an adverse civil consequence and,
therefore, they had a right to be beard before and during the process of
c disinvestment. The type of consultation with the workmen which was neces-
sary, according to Shri Dipankar P. Gupta, was whether BALCO should go
through the process of disinvestment; who should be the strategic partner; and
how should the bid of the strategic partner be evaluated. Referring to the
avennent of the Union of India to the effect that interest of the employees has
D been protected, Shri Dipankar P. Gupta, submitted that in fact there was no
effective protection of the workmen's interest in the process of disinvestment.
He further submitted that the workmen have reason to believe that apart from
the sale of 51 % of the shares in favour of Sterlite Industries the Agreement
postulates that balance 49% will also be sold to them with the result that when
E nonnally in such cases 5% of the shares are disinvested in favour of the
employees the same would not happen in the present case. Reliance was placed
on the decision of National Textile Workers' Union and Ors. v. P.R. Ramakrishnan
and Ors., [1983] 1 SCC 228 and it was also contended that even though there
may be no loss of jobs in the present case but the taking away of the right or
protection of Articles 14 and 16 is the civil consequence and, therefore, the
F workmen have a right to be heard. It was submitted that such rights and benefits
are both procedural as well as substantive. Procedural benefits and rights
includes the right to approach High Court under Article 226 of the Constitution
and this Court under Article 32 of the Constitution in the event of violation of
any of their rights. This is a major advantage since it is a relatively swift method
G of redressal of grievances which would not be available to employees of private
organisations. Instances were given of the substantive rights which flow
from Articles 14 and 16 like, right to equality, equal pay for equal work, right
to pension including the principle, that there can be no discrimination in the
matter of granting or withboldirig of pension vide Bharat Petroleum (Erstwhile
H Burmah Shell) Management Staff Pensioners v. Bharat Petroleum Corporation
BALCO EMPLOYEES UNION (REGD.) v. U.O.I. [KIRPAL, J.] 537
Ltd. and Ors., [ i 988] 3 sec page 32, right to inquiry and reasons before A
dismissal etc.

The aforesaid contentions of Shri Gupta were supported by Shri G.L.
Sanghi and Shri Ranjit Kumar, senior counsel, appearing for some of the
Unions who were intervenors in the writ petition filed by BALCO Employees'
Union. He submitted that the workers should have been heard at different
B
stages during the process of disinvestment, the manner in which views may be
invited and evaluated by the Government; the method of evaluation; the factors
to be taken into consideration and the choice of the strategic partner; the terms
and conditions under which the strategic partner will take over the employment
of the workers and the terms and conditions of the Share Holders Agreement C
are the stages in which the workers should have been heard and consulted. It
was submitted that the decision of the Delhi High Court of 3rd August, 1999
does not come in the way of these contentions being raised inasmuch as the
petition at that time was regarded as premature and the order which was passed
actually preserves the workers' rights to raise the contention in future. D
Reiterating these contentions Shri Ravindra Shrivastava, learned Advo-
cate General, Stale of Chhattisgarh submitted that the State docs not challenge
the policy of disinvestment per se on principle as a measure of socio-economic
reform and for industrial well being in the country. He, however, contended that
the implementation of the policy of disinvestment, in the present case, has E
failed to evolve a comprehensive package of socio-economic and political
reform and to structure the decision making process so as to achieve in a just,
fair and reasonable manner, the ultimate goal of the policy and that the interest
of the workers in the industrial sector cannot be undermined and, therefore, any
decision which was likely to affect the interest of the workers and employees F
as a class as a whole cannot and ought not to be taken to the exclusion of such
class, lest it may be counter productive. He contended that 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 sue-
cessful. In this regard, it was not shown from any material or record that the
G

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. This non-
consideration indicates that there has been an arbitrariness in not taking into
H
538 SUPREME COURT REPORTS [2001] SUPP. 5 S.C.R.
A consideration relevant facts in the decision making process. It is further con-
tended that the impugned decision defeats the provisions of the M.P. Land
Revenue Code and goes against the fundamental basis on which the land was
acquired and allotted to the company.

Implicit in the submissions on behalf of the employees is the challenge ·
B to the decision to disinvest majority of the shares of BALCO in favour of
Sterlite Industries Limited. The first question, therefore, which would arise for
consideration, is whether such a decision is amenable to judicial review and if
so within what parameters and to what extent.

C On behalf of the Union of India, the Attorney General submitted that
since 1990-91 successive Governments have gone in for disinvestment.
Disinvestment had become imperative both in the case of Centre and the States
primarily for three reasons. Firstly, despite every effort the rate of returns of
governmental enterprises had been woefully low, excluding the sectors in
which government have a monopoly and for which they can, therefore, charge
D
any price. The rate of return on central enterprises came to minus 4% while
the cost at which the government borrows money is at the rate of 10 to 11 %.
In the States out of 946 State level enterprises, about 241 were not working
at all; about 551 were making losses and 100 were reported not to be submitting
their accounts at all. Secondly, neither the Centre nor the States have resources
E to sustain enterprises that are not able to stand on their own in the new
environment of intense competition. Thirdly, despite repeated etforts 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
F become faster.

In support, the Solicitor General submitted that the challenge to the
decision to disinvest on the ground that it impairs public interest, or that it was
without any need to disinvest, or that it was inconsistent with the decision of
the Disinvestment Commission was untenable.
G
It was submitted by the learned Attorney General that the wisdom and
advisability of economic policies of Government are not amenable to judicial
review. It is not for Courts to consider the relative merits of different economic
policies. Court is not the Forum for resolving the conflicting clauses regarding
H the wisdom or advisability of policy. It will be appropriate to consider some
BALCO EMPLOYEES UNION (REGD.) v. U.0.1. [KIRPAL, J.] 539
relevant decisions of this Court in relation to judicial review of policy deci- A
sions.

While consid~ring the validity of the Banking Companies (Acquisition
and Transfer of Undertakings) Ordinance 1969, this Court in Rustom Cavasjee
Cooper v. Union of India, [1970] 1 SCC 248 at page 294 observed as under:-
B
"It is again not for this Court to consider the relative merits of the
different political theories or economic policies ..... This Court has the
power to strike down a law on the ground of want of authority, but the
Court will not sit in appeal over the policy of the Parliament in enacting
a law.... " c
Applying the analogy, just as the Court does not sit over the policy of
the Parliament in emcting the law, similarly, it is not for this Court to examine
whether the policy of this disinvestment is desirable or not. Dealing with the
powers of the Court while considering the validity of the decision taken in the
sale of certain plants and equipment of the Sindri Fertilizer Factory, which was D
owned by a Public Sector Undertaking, to the highest tenderer, this Court in
Fertilizer Corporation Kamgar Union (Regd.), Sindri and Ors. v. Union ~f
India and Ors., [1981] 1 SCC 568 at page 584, while upholding the decision
to sell, observed as follows :-
E
" .. We certainly agree that judicial interference with the administration
cannot be meticulous in our Montesquien system of separation of
powers. The Court cannot usurp or abdicate, and the parameters of
judicial review must be clearly defined and never exceeded. If the
Directorate of a Government company has acted fairly, even if it has
faltered in its wisdom, the court cannot, as a super-auditor, take the F
Board of Directors to task. This function is limited to testing whether
the administrative action has been fair and free from the taint of
unreasonableness and has substantially complied with the norms of
procedure set for it by rules of public administration."
G
With regard to the question of the locus standi of the workmen, who
feared large-scale retrenchment, to challenge the validity of action taken by the
Company, it was observed at page 589 as follows :-

"If a citizen is no more than a wayfarer or officious intervener without
any interest or concern beyond what belongs to any one of the 660 H
540 SUPREME COURT REPORTS [2001] SUPP. 5 S.C.R.
A million people of this country, the door of the court will not be ajar for
him. But, if he belongs to an organisation which has special interest
in the subject matter, if he has some concern deeper than that of a
busybody, he cannot be told off at the gates, although whether the issue
raised by him is justiciable may still remain to be considered. I,
B therefore, take the view that the present petition would clearly have
been permissible under Article 226".

In State qf M.P. and Ors. v. Nandlal Jaiswal and Ors., [1986] 4 SCC 566
the change of the policy decision taken by the State of Madhya Pradesh to grant
licence for construction of distilleries for manufacture and supply of country
c liquor to existing contractors was challenged. Dealing with the power of the
Court in considering the validity of policy decision relating to economic matters,
it was observed at page 605 as follows :-

"But, while considering the applicability of Article 14 in such a case,
D we must bear in mind that, having regard to the nature of the trade or
business, the Court would be slow to interfere with the policy laid
down by the State Gavernment for grant of licences for manufacture
and.sale of liquor. The Court would, in view of the inherently perni-
cious nature of the commodity allow large measure of latitude to the
State Government in determining its policy of regulating, manufacture
E
and trade in liquor. Moreover, the grant of licences for manufacture
and sale of liquor would essentially be a matter of economic policy
where the Court would hesitate lo intervene and strike down what the
State Government has done, unless it appears to be plainly arbitrary,
irrational or mala fide. We had occasion to consider the scope of
F interference by the Court under Article 14 while dealing with laws
relating to economic activities in R.K. Garg v. Union of India. We
pointed out in that case that laws relating to economic activities should
be viewed with greater latitude than laws touching civil rights such as
freedom of speech, religion, etc. We observed that the legislature
G should be allowed some play in the joints because it has to deal with
complex problems which do not admit of solution through any doc-
trinaire or strait-jacket formula and this is particularly true in case of
legislation dealing with economic matters, where, having regard to the
nature of the problems required to be dealt with, greater play in the
H joints has to be allowed to the legislature. We quoted with approval the
BALCO EMPLOYEES UNION (REGD.) v. U.O.I. [KIRPAL, J.] 541
following admonition given by Frankfurter, J. in Morey v. Dond. A

In the utilities, tax and economic regulation cases, there are good
reasons for judicial self-restraint if not judicial deference to legislative
judgement. The legislature after all has the affinnative responsibility.
The Courts have only the power to destroy, not to reconstruct. When
these are added to the complexity of economic regulation, the uncer- B
tainty, the liability to error, the bewildering co~flict ~{the experts, and
the number ~f times the judges have been overruled by events- self-
/imitation can be seen to be the path to judicial wisdom and institu-
tional prestige and stability.
c
What we said in that case in regard to legislation relating to economic
matters must apply equally in regard to executive action in the field
of economic activities, though the executive decision may not be
placed on as high a pedestal as legislative judgement insofar as judicial
deference is concerned. We must not forget that in complex economic
D
matters every decision is necessarily empiric and it is based on experi-
mentation or what one may call 'trial' and error method' and, there-
fore, its validity cannot be tested on any rigid 'a priori' considerations
or on the application of any strait-jacket formula. The Court must
while adjudging the constitutional validity of an executive decision
relating to economic matters grant a certain measure of freedom or E
'play in the joints' to the executive. "The problem of government" as
pointed out by the Supreme Court of the United States in Metropolis
Theatre Co. v. State of Chicago

are practical ones and may justify, if they do not require, F
rough accommodations, illogical, it may be, and unscientific. But
even such criticism should not be hastily expressed. What is best
is not discernible, the wisdom of any choice may be disputed or
condemned. Mere errors of government are not subject to our
judicial review. It is only its palpably arbitrary exercises which

- can be declared void.

The Government, as was said in Pennian Basin Area Rate cases, is
entitled to make pragmatic adjustments which may be called for by
G

particular circumstances. The Court cannot strike down a policy de-
cision taken by the State Government merely because it feels that H
j•
542 SUPREME COURT REPORTS [2001] SUPP. 5 S.C.R.
A another policy decision would have been fairer or wiser or more
scientific or logical. The Court can interfere only if the policy decision
is patently arbitrary, discriminatory or mala fide. It is against the
background of these observations and keeping them in mind that we
must now proceed to deal with the contention of the petitioners based
B on Article 14 of the Constitution."

A policy decision of the Government whereby validity of contract en-
tered into by Municipal Council with the private developer for construction of
a commercial complex was i~pugned came up for consideration in G.B.
Mahajan and Ors. v. Jalgaon Municipal Council and Ors., [1991] 3 SCC 91
C and it was observed at page 104 as follows :-

" ..The criticism of the project being 'unconventional' does not add to
or advance the legal contention any further. The question is not whether
it is unconventional by the standard of the extant practices, but whether
there was something in the law rendering it impermissible. There is,
D no doubt, a degree of public accountability in all governmental enter-
prises. But, the present question is one of the extent and scope of
judicial review over such matters. With the expansion of the State's
presence in the field of trade and commerce and of the range of
economic and commercial enterprises of government and its
E instrumentalities there is an increasing dimension to governmental
concern for stimulating efficiency, keeping costs down, improved
management methods, prevention of time and cost overruns in projects,
balancing of costs against time scales, quality control, cost-benefit
ratios etc. In search of these values it might become necessary to adopt
F appropriate techniques of management of projects wi(h concomitant
economic expediencies. These are essentially matters of economic
policy which lack adjudicative disposition, unless they violate consti-
tutional or legal limits on power o: have demonstrable pejorative
environmental implications or amount to clear abuse of power. This

-
again is the judicial recognition of administrator's right to trial and
G
error, as long as both trial and error are bona fide and within the limits
of authority ... "

To the same effect arc the observations of this Com1 in Peerless General
Finance and Investment Co. limited and Anr. v. Reserve Bank qf India, [ 1992]
H 2 sec 343 in which Kasliwal, J. observed at page 375 as follows :-
BALCO EMPLOYEES UNION (REGD.) v. U.0.1. [KIRPAL, J.) 543
"31. The function of the Court is to see that lawful authority is not A
abused but not to appropriate to itself the task entrusted to that author-
ity. It is well settled that a public body invested with statutory powers
must take care not to exceed or abuse its power. It must keep within
the limits of the authority committed to it. It must act in good faith and
it must act reasonably. Courts are not to interfere with economic policy B
which is the function of experts. It is not the function of the courts to
sit in judgement over matters of economic policy and it must neces-
sarily be left to the expert bodies. In such matters even experts can
seriously and doubtlessly differ. Courts cannot be expected to decide
them without even the aid of experts".
c
In Premium Granites and Anr. v. State of T.N. and Ors., (1994] 2 SCC
691 while considering the Court's powers in interfering with the policy deci-
sion, it was observed at page 715 as under:-

"54. It is not the domain of the Court to embark upon unchartered D
ocean of public policy in an exercise to consider as to whether the
particular public policy is wise or a better, public policy can be
evolved. Such exercise must be left to the discretion of the executive
and legislative authorities as the case may be ... "
E
The validity of the decision of the Government to grant licence under the
Telegraph Act 1885 to non-government companies for establishing, maintain-
ing and working of telecommunication system of the country pursuant to
Government policy of privatisation of Telecommunications was challenged in
Delhi Science Forum and Ors. v. Union ~f India and Anr., [1996] 2 SCC 405.
It had been contended that Telecommunications was a sensitive service which
F
should always be within the exclusive domain and control of the Central
Government and under no situation should be parted with by way of grant of
licence to non-government companies and private bodies. While rejecting this
contention, it observed at page 412 that :
G
" ... The national policies in respect of economy, finance, communica-
tions, trade, telecommunications and others have to be decided by
Parliament and the representatives of the people on the floor of the
Parliament can challenge and question any such policy adopted by the
ruling Government..." H
544 SUPREME COURT REPORTS [2001] SUPP. 5 S.C.R.
A The Court then referred to an earlier decision in the case of R. K.
Garg v. Union of India and Ors., [1981] 4 SCC 675 where there was an
unsuccessful. challenge to a law enacted by Parliament and held ·at page 413
as follows :-

"What has been said in respect of legislations is applicable even in
B
respect of policies which have been adopted by Parliament. They
cannot be tested in Court of Law. The courts cannot express their
opinion as to whether at a particular juncture or under a particular
situation prevailing in the country any such national policy should
have been adopted or riot. There may be views and views, opinions and
c opinions which may be shared and believed by citizens of the country
including the representatives of the people in Parliament. But that has
to be sorted out in Parliament which has to approve such policies.
Privatisation is a fundamental concept underlying the questions about
the power to make economic decisions. What should be the role of the
D State in the economic deve.lopment of the nation? How the resources
of the country shall be used? How the goals fixed shall be attained?
What are to be the safeguards to prevent the abuse of the economic
power? What is the mechanism of accountability to ensu.re that the
decision regarding privatisation is in public interest? All these ques-
E tions have to be answered by a vigilant Parliament. Courts have their
limitations - because these issu.es rest with the policy-makers for the
nation. No direction can be given or is expected from the courts unless
while implementing such policies, there is violation or infringement of
any of the constitutional or statutory provision. The new Telecom
policy was placed before Parliament and it shall be deemed that
F
. Parliament has approved th.e same. This Court cannot review and
examine as to whether the said policy should have been adopted. Of
course, wheiher there is any legal or constitutional bar in adopting such
policy can certainly be examined by the Court".

G While considering the validity of the industrial policy of the State of
Madhya Pradesh relating to the agreements entered into for supply of sal seeds
for extracting oil in M.P. Oil Extraction and Anr. v. State of M.P. and Ors.,
[1997] 7 SCC 592, the Court at page 610 held as follows :-

H "41. After giving our careful consideration to the facts and circum-
BALCO EMPLOYEES UNION (REGD.) v. U.0.1. [KIRPAL, J.] 545
stances of the case and to the submissions made by the learned counsel A
for the parties, it appears to us that the Industrial Policy of 1979 which
was subsequently revi~ed from time to time cannot be held to be
arbitrary and based on no reason Whatsoever but founded on mere ipse
dixit of the State Government of M.P. The executive authority of the
State must be held lo be within its competence to frame a policy for B
the administration of the State. Unless the policy framed is absolutely
capricious and; not being il~formed by any reason whatsoev~r, can be ·
clearly held to be arbitrary and founded on mere ipse dixit ·a.f th~
executive functionaries thereby offending Article 14 o.fthe Constitution
or such policy offends other constitutional provisions or comes into
conflict with any statutory provision, the Court cannoi and should not
c
outstep its limit and tinker with the policy decision o.f the executive
functionary o.fthe State. This Court, in no uncertain terms; has sounded
a note of caution by indicating that policy decision is in the domain
of the executive authority of the Stale and the Court should not embark
on the unchartered ocean of public policy and should not question the D
efficacy or otherwise of such policy so long the same does not offend
any provision of the stature or the Constitution of_ India. The su-
premacy of each of the three organs of the ·state i.e. legislature,
executive and judiciary in their respective fields of operation needs to
be emphasised. The power of judicial review of the executive and E
legislative action must be kept within the bounds of constitutional
scheme so that there may not be any occasion to entertain misgivings
about the role of judiciary in outstepping its limit by unwarranted
judicial activism being very often talked of in these days. The demo-
cratic set-up to which the polity is so d.eeply conunitled cannot func- F
lion properly unless each of the three organs appreciate. the need for
mutual respect and supremacy in their respective fields."

(emphasis added)

The validity of <he change of Government policy in regard to the reim- G
bursement of medical expenses to its serv· ng and retired employees came up
for consideration before this Court in Stat< of Punjab and Ors. v. Ram Lubhaya
Baglia and Ors .. [1998] 4 SCC 117. The earlier policy upholding the reim-
bursement for treatment in a private hospital had been upheld by this Court but
the State of Punjab changed this policy whereby reimbursement of medical H
546 SUPREME COURT REPORTS [2001] SUPP. 5 S.C..R.
A expenses incurred in a private hospital was only possible if such treatment was
not available in any government hospital. Dealing with the validity of the new
policy, the Court observed at page 129 as follows :-

"25. Now we revert to the last submission, whether the new State
policy is justified in not reimbursing an employee, his full medical
B expenses incurred on such treatment, if incurred in any hospital in
India not being a government hospital in Punjab. Question is whether
the new policy which is restricted by the financial constraints of the
State to the rates in AI!MS would be in violation of Article 21 of the
Constitution of India. So far as questioning the validity of governmen-
c tal policy is concerned in our view it is not normally within the domain
of any court, to weigh the pros and cons of the policy or to scrutinize
it and test the degree of its beneficial or equitable disposition for the
purpose of varying, modifying or annulling it, based on howsoever
sound and good reasoning, except where it is arbitrary or violative of
D any constitutional, statutory or any other provision of law. When
Government forms its policy, it is based on a number of circumstances
on facts, law including constraints based on its resources. It is also •
based on expert opinion. It would be dangerous if court is asked to test
the utility, beneficial effect of the policy or its appraisal based on
facts set out on affidavits. The Court would dissuade itself
E
from entering into this realm which belongs to the executive. It is
within this matrix that it is to be seen whether the new policy violates
Article 21 when it restricts reimbursement on account of its financial
constraint-;."

F The reluctance of the Court to judicially examine the matters of eco-
nomic policy was again emphasised in Bhavesh D. Parish and Ors. v. Union
qf India and Anr., [2000] 5 SCC 471 and while examining the validity of
Section 45-S of the Reserve Bank of India Act 1934, it was held as follows:-

"26. The services rendered by certain informal sectors of the Indian
G economy could not be belittled. However, in the path of economic
progress, if the informal system was sought to be replaced by a more
organised system, capable o.f better regulation and discipline, then this
was an economic philosophy reflected by the legislation in question.
Such a philosophy might have its merits and demerits. But these were
H matters of economic policy. They are best left to the wisdom of the
BALCO EMPLOYEES UNION (REGO.) v. U.0.1. [KIRPAL, J.] 547
legislature and in policy matters the accepted principle is that the A
courts should not interfere. Moreover in the context of the changed

- economic scenario the expertise of people dealing with the subject
should not be lightly interfered with. The consequences of such inter-
diction can have large-scale ramifications and can put the clock back
for a number of years. The process of rationalisation of the infirmities B
in the economy can be put in serious jeopardy and, therefore, it is
necessary that while dealing with economic legislations, this Court,
while not jettisoning its jurisdiction to curb arbitrary action or uncon-
stitutional legislation, should interfere only in those few cases where
the view reflected in the legislation is not possible to be taken at all".
c
In Nannada Bachao Ando/an v. Union of India and Ors., [2000) 10 SCC
664, there was a challenge to the validity of the establishment of a large dam.
It was held by the majority at page 762 as follows :-

"229. It is now well settled that the Courts, in the exercise of their
D
jurisdiction, will not transgress into the field of policy decision. Whether
to have an infrastructural project or not and what is the type of project
to be undertaken and how it has to be executed, are part of policy-
making process and the Courts are ill-equipped to adjudicate on a
policy decision so undertaken. The Court, no doubt, has a duty to see
that in the undertaking of a decision, no law is violated and people's E
fundamental rights are not transgressed upon except to the extent
permissible under the Constitution .. "

It is evident from the above that it is neither within the domain of the
Courts nor the scope of the judicial review to embark upon an enquiry as to F
whether a particular public policy is wise or whether better public policy can
be evolved. Nor are our Courts inclined to strike down a policy at the behest
of a petitioner merely because it has been urged that a different policy would
have been fairer or wiser or more scientific or more logical.

Process of disinvestment is a policy decision involving complex eco- G
nomic factors. The Courts have consistently refrained from interfering with
economic decisions as it has been recognised that economic expediencies lack
adjudicative disposition and unless the economic decision, based on economic
expediencies, is demonstrated to be so violative of constitutional or legal limits
on power or so abhorrent to reason, that the Courts would decline to interfere. H
548 SUPREME COURT REPORTS [2001] SUPP. 5 S.C.R.
A Jn matters relating to eeonomic issues, the Government has, while taking a
decision, right to "trial and error" as long as both trial and error are ar:d within
limits of authority. There is no case made out by the petitioner that the decision
.to disinvest in BALCO is in any way capricious, arbitrary, illegal or unin-
formed. Even though the workers may have interest in t.!ie manner in which the
.B Company is conducting its business, inasmuch as its policy decision may have
an impact on the workers' rights, nevertheless.it is an incidence of service for
an employee to accept a.decision. of the employer which has been honestly •'-

taken and which is not contrary to law. Even a government servant, havirig the
pr<)tection of not only Articles 14.and 16 of the Constitution but also of Article
311, has no absolute right to remain in service. For example, apart from cases
c of disciplinary action, the se:vices of government servants can be terminated
if posts are abolished. If such employee cannot make a grievance based on part
·III of the Constitution' or Article 311 then it cannot stand to reason that like
the petiti?ncrs, non-government employees working in a company which by
reason of judicial pronouncement may be regarded as a State for the purpose
D of part' III of the Constitution, can claim a superior or a better right than a
government servant and impugn it's change of status. In taking of a policy
decision in econo1nic matters at Jength, the principles of natural justice have
no role to play. While it is expected of a responsible employer to take all aspects
in_to consideration including welfare of the labour before taking any policy
E decision that, by itself, will not entitle the employees to demand a right of
·hearing or consultation prior to the taking of the decision.

·Merely because the workmen may have protection of Articles 14 and 16
of the Constitution, by regarding BALCO as a State, it does not mean that the
·erstwhile sole shareholder viz., Government had to give the workers prior
F ·notice of hearing before deciding to disinvest. There is no principle of natural
justice which requires prior notice and hearing to persons who are generally
affected as· a class by an economic policy decision of the Government. If the
abolition of a post pursuant to a policy decision does not attract the provisions
of Article 311 of the Constitution as held in State ~f Haryana v. Shri Des Raj
G Sangar and Anr., [ 1976] 2 SCC 844, on the same parity of reasoning, the policy
ofdisinvest~ent cannot be faulted if as a result thereof the employees lose their
rights or protection under Articles 14 and 16 of the Constitution. In other
words, the existence of rights of protection under Articles 14 and 16 of the
Constitution cannot possibly have the effect of vetoing the Government's right
H to disinvest. Nor can the employees claim a right of continuous consultation
BALCO EMPLOYEES UNION (REGD.) v. U.0.1. [KIRPAL, J.] 549
at different stages of the disinvestment process. If the disinvestment process is A
gone through without contravening any law, then the normal consequences as
a result of disinvestment must follow.

The Government could have run the industry departmentally or in any
other form. When it chooses to run an industry by forming a company and it
B
becomes its shareholder then under the provisions of the Companies Act as a
shareholder, it would have a right to transfer its shares. When persons seek and
get employment with such a company registered under the.Companies Act, it
must be presumed that they accept the right of the directors and the sharehold-
ers to conduct the affairs of the company in accordance with law and at the
same time they can exercise the right to sell their shares. c
A similar question came up for consideration before Madras High C9urt.
In Southern Structurals Limited, the State of Tamil Nadu had acquired over
99% of shares and the company had become a government company. It had
incurred losses over the years and the government then decided to disinvest D
from the company. This decision was challenged by the Comp.any's employees
by filing a Writ Petition in the Madras 1-Iigh Court. It was cont~nded on their
behalf that in the event of disinvestment being effected, the employees of the
State Government would lose valuable rights including the protection of Ar-
ticles 14 and 16 of the Constitution and a right to approach the Court under E
Articles 32 and 226. Repelling this contention in Southern Structurals Stqff
Union v. Management of Southern Structurals Ltd. and Anr., [1994] 81 Comp.
Cases at page 389, the High Court held asfollows :-

"The sub111ission that in order to enable the e1nployees to invoke
Article.14 or Article 16 and to approach the High Court or the Supreme F
Court directly by invoking Article 226 or Article 32, the Government
is bound to retain its ownership of the bulk of the shares in this
company forever is devoid qf any force.

The protection qf Article 14 is available to all and is not co~fined G
to employees qf the State. The limitations placed by Article 16 on the
State_ lvith regard to en1ploy111en1 um/er the State is not intended to
compel the State to provide employment under it to all who seek such
e111ploynzenl or retain all persons presently in its service in order to
enable such persons to claim the ben~fit qf Article 16. H
550 SUPREME COURT REPORTS (2001] SUPP. 5 S.C.R.
A Employment under the State is not a precondition for approaching
the High Court or the Supreme Court. All industrial workers have a
right to approach the Labour Court or Industrial Tribunals for adju-
dication qf their rights subject to the limitations contained in the
Industrial Disputes Act. Like all citizens industrial workers also have
B the right to approach civil courts for redressal of their wrongs. The
decisions rendered by the civil, labour and industrial courts or tribu-
nals are open to challenge b~fore the High Court and the Supreme ...
Court in appropriate proceedings. Actions of the Govemmeni or other
authorities performing any public duty are amenable to correction in
proceedings under Article 226. By reason u.f the disinvestment, em-
c ployees do not lose their right to seek redressal through courts.for any
wrongs done to them.

The employees have no ves1ed right in the employer company
continuing to be a government company or "other authority''.for the
D purpose of Article 12 of the Constitution of India. Aparlfrom the.fact
lhal the very status claimed by the employees in this case is a.fortuitous •
occurrence with the etnployees having commenced work under a
private employer and while on the verge of losing employment, being
rescued by the State taking over the company, the employees cannot
E claim any righl lo decide as to who should own the shares of the
company. The State which invested of its own volition, rnn equally well
disinvest. So long as the State holds the controlling interest or the
whole qf the shareholding, employees may claim lhe status qf employ-
ees of a govem1nent co1npany or ''other authority" under Article 12
of the Constitution. The status so conferred on the employees does not
F
prevent the Goven11nent froni disinvesting; nor <loes it make the con-
sent ~f the en1ployees a necessary precondition .for disinvest111ent.

Public interest is the paramount consideration, and ~fin the public
interest the Govenunent thought it fit to take over a sick company to
G preserve the productive unit and the jobs qf those employed therein,
the govenunent can, in the public interest, with a vie~v to reducing the
continuing drain on its lin1ited resources, or \1-'ith a view to raising
.funds .for its priority 1Ve(f..rzre or developtnental projects, or even as a
measure qf mobilisin11 the funds needed for running the government,
H disinvesl from the public sector companies. Article 12 of the Consti-
BALCO EMPLOYEES UNION (REGD.) v. U.0.1. [KIRPAL, J.] 551
tution does not place any embargo on an instrumentality of the State A
or "other authority" from changing its character".

The aforesaid observations, in our opinion, enunciates the legal position
correctly. The policies of the Government ought not to remain static. With the
change in economic climate, the wisdom and the manner for the Government
B
to run commercial ventures may require reconsideration. 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.
An elaborate process has been undergone and majority shares sold. It cannot
be said that public funds have been frittered away. In this process, the change
in the character of the company cannot be validly impugned. While it was a C
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. D

Even though, the employees have no right to be heard before the decision
to disinvest takes place nevertheless it is the case of the Respondent that the
workers had been fully informed about the process of disinvestment through
an ongoing dialogue. In this connection, it is pertinent to note that the BALCO
Employees Union had filed Writ Petition No. 2249 of 1999 against the Union
E
of India before the Delhi High Court in relation to proposed disinvestment
wherein the following order was passed on 3rd August, 1999 :-

"It is stated by Dr. Singhvi, learned counsel, on instructions from
Mr. Madan Lal, President of the Petitioner that challenge to the policy F
of disinvestment in Respondent No. 5 company is not pressed. It is
.further stated that whenever the .final decision is to be taken by the
Respondents q[fel'ling the interests of the workers, the same be inti-
n1ated w;th nvn weeks' advance notice to the Petitioner:-; by the Re-
spondents. G
As .far as the protection o.f the interests o,f the workers is con-
cerned, the relie.f being premature c~inno{ be entertained and the
petition to this extent would be liable lo be rejected.

Mr. Rawal, learned Additional Solicitor General states that if any H
552 SUPREME COURT REPORTS [2001] SUPP. 5 S.C.R.
A decision relating to the interests of the employees/ workers is taken by
the Respondents, two weeks' prior notice ~{the same will be given to
the Petitioners.

In view of the above, the petition is disposed of with liberty to the
Petitioners to approach the Court in the event of any decision adverse
B to the interest of the employees/workers being taken.

Petition dfaposed ~f accordingly".

According to the company, after the aforesaid order of 3rd· August, 1999
was passed, the entire rationale and process of disinvestment was explained to
c the workers through BALCO Samachar News letter. A meeting was held in
May, 2000 by the then Chairman and Managing Director with the Union
leaders where the Joint Secretary of the Ministry of Mines, who was also
Director of the company, was also present. In addition thereto, the workers'
unions had been making various representations to the Government which were ·
-
D considered by it before finalising of various documents. That there was a
dialogue between the Government and representatives of the workers which is
evident from the copy of minutes of the meetings held on February 14, 2001
between the union leaders and officers of the companies and the Government.
The minutes of the meeting with leaders of six trade unions, who had taken part
E in the discussfon, disclose that, in principle, the Trade Unions were not against
disinvestment but their interest should be sufficiently safeguarded.

We find that in the shareholders agreement between the Union of India
and the strategic partner, it is provided that there would be no retrenchment of
any worker in the first year after the closing date and thereafter restructuring
F of the labour force, if any, would be implemented in a manner recommended
by the Board of Directors of the company. The shareholders Agreement further
mandates that in the event reduction in the strength of its employees is required,
then it is to be ensured that the company offers its employees an option to
voluntarily retire on terms that are not in any manner less favourable than the
G Voluntary Retirement Scheme offered by the company on the date of the
arrangement. Apart from the conditions stipulated in the shareholders agree-
ment, Shri Sundaram, learned senior counsel on behalf of the company has
stated in the Court that it will not retrench any worker(s) who are in the
employment of BALCO on the date of takeover of the management by the
H strategic partner, other than any dismissal or termination of the worker(s) of
BALCO EMPLOYEES UNION (REGO.) v. U.0.1. [KIRPAL, J.] 553
the company from their employment in accordance with the applicable staff A
regulations an<l standing orders of the company or other applicable laws. We
record the said statement.

We are satisfied that the workers' interests are adequately protected in
the process of disinvestment. Apart from the aforesaid undertaking given in the
B
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. Further more, the service conditions are governed by the
certified orders of the company and any change in the conditions thereto can
only be made in accordance with law. The demands made by the employees
of BALCO were considered by the !MG in its meeting held on 25th January, C
2001 and the issues emanating therefrom were ·placed by the Department of
Disinvestment before the Cabinet Committee on Disinvestment which held its
meeting on !st February, 2001. A note containing the comments of the Ministry
of Mines which was endorsed by the !MG of the Cabinet Committee on
Disinvestment was forwarded by the Minister of Mines, Government of India D
to Shri Tara Chand Vi yogi, President, M.P. Rashtriya Mazdoor Congress. The
said note, apart from setting out reasons for disinvestment of BAI.CO, also
refers how the interest of the employees of BALCO has been protected in the
process of disinvestment. This note states:-

"Regarding employees, adequate provisions have been made in
E
Share Holders' Agreement (SHA) as follows :-

"Recital H Subject to Clause 7.2, the Parties envision that all employ-
ees of the Company on the date hereof shall continue in the
employment of the Company. F
Clause 7.2 (e) It shall not retrench any part of the labour force of the
Company for a period of one(!) year from the Closing Date
other than any dismissa1 or tennination of employees of the
Company from their employment in accordance with the
applicable staff regulations and standing orders of the
G
Company or applicable Law; and

Clause 7.2 (() Subject to the sub-clause (e) any restructuring of the
labour force of the company shall be implemented in the
manner recommended by the Board and in accordance with H

-1
554 SUPREME COURT REPORTS [2001] SUPP. 5 S.C.R.
A all applicable laws. The SP in the event of any reduction of
the strength of its employees shall, ensure that the Com-
pany offers its employees an option to voluntarily retire on
terms that are not, in any manner, less favourable than the
voluntary retirement scheme offered by the company on
B the date of this agreement;"

It may be mentioned that as per the provisions contained in the
Industrial Disputes Act, BALCO will remain an industrial establish-
ment even after the disinvestment and all the provisions of Industrial
Disputes Act will automatically apply to BALCO.
c
In an organised sector, the issues of job security, wage structure,
perks, welfare facilities, etc., of the workmen are governed by bipar-
"tite/tripartite agreements. These agreements are in the nature of "set-
tlement" underthe Industrial Disputes Act. Even after the disinvestment,
D the BALCO management will be required to enter into bipartite/
tripartite agreements with the workmen through unions, and, the terms
and conditions in the agreement would be always governed by the
practices and procedures applicable under collective bargaining. It is
a fact that any agreement between two or more parties is based on the
principles of mutual consent. Hence, the consent of the management
E
to better service conditions, etc., would certainly depend on the achieve-
ment of the productivity and production targets by the workers from
time to time.

Regarding providing social security to the BALCO employees at
F par with government employees, it is to be noted that as a matter of
principle, no industrial establishment has any right to be compared
with a government establishment. Hence the issue of guaranteeing the

-
social security of the BALCO employees at par with the employees of
the Government establishments may not be possible any time before
G or after the disinvestment.

So far as employees' stock options and a lock-in period for the
investor are concerned, there is a provision in the documents pertain-
ing to the proposed strategic sale, for giving upto 5 per cent of the
equity to employees, and for a lock-in period of three years.
H
BALCO EMPLOYEES UNION (REGO.) v. U.0.1. [KIRPAL, J.] 555
Regarding guaranteeing that there will be no closure of any estab- A
lishment of the company for a minimum period of 10 years, it is to be
noted that the ''.Closure" of any undertaking of an Industrial Establisi1-
ment of the kind of BALCO is governed by Section 25(0) of Chapter
V-B of the Industrial Disputes Act, by virtue of which BALCO man-
agement before or after disinvestment is not free to close down any part B
of the BALCO at their sweet will. The closure is governed by the law
of the land and under the existing provisions of Industrial Disputes
Act, "genuineness and adequacy of the reasons stated by the em-
ployer" and "the interests of the general public and all other relevant
factors" has to be examined by the appropriate government, and, for
doing so the government give a reasonable opportunity of hearing to
c
the employer and workmen and the persons interested in such closure.
It means that unless and until the appropriate Government grants
permission, the BALCO management will not be competent to close
down any undertaking of the company even after disinvestment. So
there are protections available under the Act against arbitrary closure D
of any undertaking of the BALCO after disinvestment.

The unions desire that the prospective buyer should disclose its
plans for investment/modernisation of BALCO after disinvestment. As
a matter of fact, at the time of submitting financial bids the prospective E
buyers are expected to submit the business plan as well. But perhaps
in such commercial ventures, given the changing market conditions,
the business plan submitted by prospective buyers may not be enforce-
able under law.

The trade unions desire that all listed demands should be accepted F
and put in the form of a written agreement between the government
and the representatives of recognised unions before finalising any
agreement with the prospective buyers. In fact, the Government and
BALCO are two different legal entities. The Government is disinvesting
its S 1% equity in the BALCO. Under law, no enforceable agreement G
may be entered between the Government and the workmen of BALCO
as any such agreement will not have force of law. In order that an
agreement has the force of law, it should be a written agreement
between employer and workmen. The Government is not the employer
of the workmen employed in BALCO. As such, any such agreement H
556 SUPREME COURT REPORTS [2001] SUPP. 5 S.C.R.
A is neither desirable nor necessary and not enforceable".

From the aforesaid recital of facts, it is clear that safeguarding the
interests of the workers was one. of the concerns of the Government. Repre-
sentations had been received from the Trade Union leaders and effort was made
to try and ensure that the process of disinvestment did not adversely. affect the
B workers.

Even though the employees of the company may have an interest in
seeing as to how the company is managed, it will not be possible to accept the
contentions that in the process of disinvestment, the principles of natural justice
c would be applicable and that the workers, or for that matter any other party
having an interest therein, would have a right of being heard. As a matter of
good governance and administration whenever such policy decisions are taken,
it is desirable that there should be wide range of consultations including
considering any representations which may have been filed, but there is no •
provision in law which would require a hearing to be granted before taking a
D
policy decision. In exercise of executive powers, policy decisions have to be
taken from time to time. It will be impossible and impracticable to give a formal
hearing to those who may be affected whenever a policy decision is taken. One
of the objects of giving a hearing in application of the principles of natural
justice is to see that an illegal action or decision does not take place. Any wrong
E order may adversely affect a person and it is essentially for d1is reason that a
reasonable opportunity may have to be granted before passing of an adminis-
trative order. In case of the policy decision, however, it is impracticable, and
at times against the public interest, to do so, but this does not mean that a policy
decision which is contrary to law cannot be challenged. Not giving the work-
F 1nen an opportunity of being heard cannot per se be a ground of vitiating the
decision. If the decision is otherwise illegal as being contrary to law or any
constitutional provision, the persons affected like the workmen, can impugn the
same, but not giving a pre-decisional hearing cannot be a ground for quashing
the decision.
G Our attention was invited to the decision in the National Textile Workers'
Union and Ors. v. P.R. Ramakr'shnan (supra) where at page 245, Bhagwati,
J. (as he then was) had observed that in deciding whether the Court should wind
-
up a company or change its rnanagement, the Court n1ust take into considera-
tion not only the interests of the shareholders and creditors but also amongst
H other things, the interests of the workers: The workers must have an opportu-
BALCO EMPLOYEES UNION (REGD.) v. U.0.1. [KIRPAL, J.] 557
nity of being heard for projecting and safeguarding their interests before A
winding up Order is passed by the Court: It was contended that similarly before
a policy decision is taken, and also in the execution thereof, as the interests of
the workers is going to be affected, the petitioning workers herein have a right
to be heard. There can be no doubt that in judicial proceedings where rights
are likely to be affected, principles of natural justice would require the Court B
to give a hearing to the party against whom an adverse or unfavourable Order
may be passed. It was in relation· 10 the winding up. proceedings which were
pending before a Court that this Court in National Textiles Workers Union case
held that they had a right to be heard. The position, in the present case,. is
different. No judicial or quasi-judicial functions are exercised by the Govern-
ment when it decides, as a matter of policy, to disinvest shares in a Public
c
Sector Undertaking. While it may be fair and sensible to consult the workers
in a situation of change of management, there is, however, in law nO such
obligation to consult in the process of sale of majority shares in a company.
The decision in National Textiles Workers Union case can, therefore, be ofno
assistance to the petitioner. D

In this connection, we approve the following observations of the Karnataka
High Court in Pro.f Babu Mathew and Ors. v. Union ~{India and Ors.• [1997]
90 Company Cases 455 where the Court while dealing with disinvestment upto
49% of the government's holding in a public sector company observed at page
E
478 as follows:

"Any economic reform, including disinvestment in PSEs is intended
to shake the system for public good. The intention of disinvestment is
to make PSEs more efficient and competitive and perform better. The
concept of the public sector and what should be the role of the public F
sector in the development of the country, are matters of policy closely
linked to economic reforms. While it is true that any policy of the
Government should be in public interest, it is not shown how prior
consultation with employees of a PSE before disinvestment is a facet
of such public interest." G
As a result of disinvestment of 51 % of the shares of the company, the
management and control, no doubt, has gone into private hands. Nevertheless,
it cannot, in law, be said that the employer of the workmen has changed. The
employees continue to be under the company and change of management does
not in law amount to a change in employment. H
558 SUPREME COURT REPORTS [2001] SUPP. 5 S.C.R.
A Apart from the fact that it will not be open to a Court to consider whether
there has been a gross failure to evolve a comprebensive package towards
implementation of the policy on disinvestment, as was contended by the
Advocate-General of Chhattisgarh, it is not possible to accept the said conten-
tion as being, in fact, correct. In the process of disinvestment, it is evident that
B the Central Government was aware of the interests of the workers and employ-
ees as a class. It was precisely for this reason that safeguards were inserted in.
the Share Holders Agreement. These terms, which have been referred to were
incorporated in the agreement after the demands of the BALCO employees
were considered by the !MG in its meeting on 25th January, 2001 and thereafter
the same were considered by the Cabinet Committee on Disinvestment on 1st
c February, 2001.

As far as the grievance of alleged non-consultation of the State Govern-
ment in the process of disinvestment of BALCO is concerned, that is a matter I
between the State Government and the Union of India and any grievance on
D that score cannot be raised by the State against the Government of India in these
proceedings initiated by the workmen. However, it is not possible to believe
that during the entire process of disinvestment of BALCO, the Stale Govern-
ment was oblivious of what was ~appening. The facts enumerated herein above
clearly show that wide publicity was given at various stages in connection with
E disinvestment. Firstly, it was after due publicity that a global Adviser was
appointed and thereafter advertisement was issued in an effort to select the
strategic partner. The whole process of disinvestment of BALCO took place
over a period of about two years. The issue was even debated by members in
the Lok Sabha. There was nothing to prevent the State of Chattisgarh at any
stage prior to the selection of the strategic partner, either to forward its· views
F or a representation or even lo make an offer of buying the 51 % of the shares
which were being sold. Once Share Holders' Agreement has been signed, the
offer of the State of Chattisgarh to buy 51 % equity shares in the company for
a higher value of Rs. 551.41 crores would be of no consequence. This offer
did not see the light of the day till the start of the present litigation.
G
It has been contended on behalf of the State of Chattisgarh as well as by
Shri Ranjit Kumar that the process of disinvestment was a flagrant violation/
deviation of the recommendations of the expert body of the Disinvestment ,.
Commission. It was submitted that the Disinvestment Commission had recom-
H mended disinvestment of only 40% of the Government's equity to the strategic
BALCO EMPLOYEES UNION (REGD.) v. U.0.1. [KIRPAL, J.] 559
partner through a transparent and competitive global bidding process but the A
Counter Affidavit of the Union of India disclosed that it had taken a decision
to off-load its equity holding of 51 % instead of 40% on the basis of the letter
of the Chairman of the Commission dated 12th June, 1998. The contention of
the learned Counsel was that the said letter of the Chairman could not be a
substitute for the recommendations of the expert body of the Commission and B
the Government of India should not have acted solely on the basis of the letter.
It was submitted that there was, thus, gross departure from the recommenda-
tions made by the Commission and the same was without any valid reason or
consideration of overwhelming public interest which has resulted in vitiating
the decision making process.
c
The Disinvestment Commission was established by the Government's
Resolution on 23rd August, 1996. The Commission was to have a full-time
Chairman and four part-time Members. The Commission was to make recom-
mendations and be responsible for the implementation of the policies of the
Government of India with respect to disinvestment. The terms of reference and D
the functions of the Commission were provided for in paras 3, 4 and 5 of the
said Resolution. However, by another Resolution dated 12th January, 1998,
paras 3 to 5 were deleted. It was now specifically stated that the Disinvestment
Commission shall be the advisory body and will carry out such activities
relating 10 disinvestment as may be assigned to it by the Government. It was
E
clearly stipulated therein that the final decision on the recommendations of the
Commission will vest with the Government. In April, 1997, the Commission
advised the Government that BALCO needed to be privatised and a significant
share of 40% of the equity should be sold to a strategic partner. This was to
be followed by the reduction of Government's share holding to 26%. The
Disinvestment Commission had categorised BALCO as a non-core group in- F
dustry. After the issue of global advertisement, M/s Jardine Fleming Securities
(I) Limited was appointed as global Adviser on 15th January, 1998. lt is on 12th
June, 1998 that the Chairman, Disinvestment Commission advised that the
Government may consider offering sale of 51 % or more equity of BALCO to
the strategic partner along with transfer of management. This, according to the G
Chairman, would fetch a better price of shares. In the light of these facts, it is
not possible to accept the contention that the Union of India deviated from the
advice which was given by the Disinvestment Commission. Firstly, the advice
of this Disinvestment Commission was not binding on the Government of
India. Further more, the terms of reference and the provisions contained in the H
560 SUPREME COURT REPORTS [2001] SUPP. 5 S.C.R.
A Resolution dated 23rd August, 1996 which required the disinvestment under
the supervision of the Commission and the Commission advising the Govern-
ment on matters like consideration of the interests of the stake-holders, work-
ers, consumers etc., were deleted by the subsequent Resolution of 12th January,
1998. The Commission became only an advisory or recommendatory body. It
B is the full-time Chairman of the Commission who wrote on 12th June, 1998
that the Government may consider strategic sale of 50% or more of the equity
instead of the recommendation which was contained in the earlier Report of
the Commission for sale of only 40% of the equity. For the Government to
accept this advise and to come to the conclusion that sale of 50% or more of
the equity of BALCO along with transfer of management would secure for it
c a better price than the sale of only 40% cannot, under any circumstances, be
regarded as unwarranted, illegal or arbitrary.

It is clear from the facts enumerated above that at each stage of
disinvestment, public notices were issued in appointing the Global Adviser and
D then in selecting the strategic partner. The Global Adviser, after inviting quo-
tations, selected a valuer, Shri P.V. Rao. Simultaneously, with the process of
valuation, steps were taken for selecting the strategic partner by calling for
expression of interest after advertisements in leading Journals and newspapers.
Nevertheless. contention is sought to be raised that the method of valuation was
E . faulty, some assets were not taken into consideration and that Rs. 551.5 crores
offered by Mis Sterlite did not represent the correct value of 51 % shares of the
company along with its controlling interest. It is not for this Court to consider
whether the price which was fixed by the Evaluation Committee at Rs. 551.5
crores was correct or not. What has to be seen in exercise of judicial review
of administrative action is to examine whether proper procedure has been
F followed and whether the reserve price which was fixed is arbitrarily low and
on the face of it, unacceptable.

Assets including shares can be sold in a number of ways, i.e., they can
be sold by public auction, tenders or sealed offers or by negotiations. The
G exercise which was undertaken to appoint valuers and to get a value of this
controlling interest of 51 % of the shares was presumably to arrive at the reserve
price. What the assets will fetch, is ultimately reflected in the offer which is
received. Despite global advertisement, initially only eight companies submit-
ted their expression of interest. The !MG, consisting of high officials rejected
the bids of two of the eight parties and ultimately only three viz., Alcoa/USA,
H
BALCO EMPLOYEES UNION (REGD.) v. U.0.1. [KIRPAL, J.] 561
HINDALCO, Sterlite conducted due diligence on BALCO between September A
and October, 2000. After carrying out the necessary inspection (due diligence),
it is only two out of three applicants who gave their bid. Alcoa having dropped
out, the bid of Sterlite industry was more and double of the bid of HINDALCO.
The bidders at the time of furnishing their bids did not know what will be the
reserve price which had to be fixed. It is only after the receipt of the bids that B
the reserve price was made known. The perception in the mark~t. therefore,
clearly was that 51 % shares of BALCO along with its management was not
worth more than Rs. 550.5 crores. The only other bidder who had expressed
interest was HINDALCO whose bid was only Rs. 275 crores. Under the
circumstances, when the Government had decided to disinvest in BALCO by
accepting a bid far in excess of the reserve price which was fixed by the
c
Evaluation Committee, the said decision cannot, under any circumstances, be
faulted. Whether the reserve price should have been 514.4 crores or more
appears to be immaterial when the best price which has been offered for the
sale of 51 % stake in BALCO after global advertisement was only Rs. 551.5
crores. There is no suggestion that there was any other company or institution D
which had or could offer more than the said sum. When proper procedure has
been followed, as in this case, and an offer is made of a price more than the
reserve price then there is no basis for this Court to conclude that the decision
of the Government lo accept the offer of Sterlite is in any way vitiated.
E
It was contended by the learned Advocate General that the whole process
lacked transparency. We are not able to appreciate this contention. The
disinvestment of BALCO commenced with the recommendation by the
Disinvestment Committee in its second Report suggesting that the Government
may disinvest BALCO. It is by global advertisement that the global Adviser
and the strategic partner was chosen. At every stage, the matter was looked into F
by the !MG and ultimately by the Cabinet Committee on Disinvestment. The
system which was evolved was completely iransparent. It was made known.
Transparency does not mean the conducting of the Government business while
sitting on the cross roads in public. Transparency would require that the manner
in which decision is taken is made known. Persons who are to decide are not G
arbitrarily >elected or appointed. Here we have the selection of the global
adviser and the strategic partner through the process of issuance of global
advertisement. It is the global Adviser who selected the valuer who was already
on the list of valuers maintained by the Government. Whatever material was
received was examined by high Power Committee known as the !MG and the H
562 SUPREME COURT REPORTS (2001] SUPP. 5 S.C.R.
A ultimate· decision was taken by the Cabinet Committee on Disinvestment. To
say that there has been lack of transparency, under these circumstances, is
uncharitable and without any basis.

It was contended on behalf of the State of Chattisgarh that the land on
which industry has been set up was originally tribal land. The said land could
B have been acquired and used by public sector undertaking but the tribal land
could not be transferred to a non-tribal. Once majority shares in BALCO were
transferred to a non-tribal company, the prohibition contained against the ,,
transfer of tribal land came into operation. Relying on the majority decision of
this Court in Samatha v. State ~f A.P. and Ors.. (1997] 8 SCC 191, it was
C contended that the transfer of land even by lease in favour of BALCO must
be regarded as being invalid.

In Samatha s case, .this Court had to consider the validity of the grant of
' land in a scheduled area to the 'Non-Tribals'. The
mining lease of Government
Court had to consider the effect and applicability of Section 3(1) of the A.P.
D
Scheduled Areas Land Transfer Regulation, 1959 which reads as follows:-

"3. Tran.~fer of immovable property by a member o.f a Scheduled
Tribe-( l)(a) Notwithstanding anything in any enactment, rule or law
in .force in the Agency tracts any trans.fer of immovable property
E situated in the Agency tracts by a person, whether or not such person
is a member ~fa Scheduled Tribe, shall be absolutely null and void,
unless such trans.fer is rnade in .favour of a person, who is a nzen1ber
~fa Scheduled Tribe or a society registered or deemed to be registered
under the Andhra Pradesh Cooperative Societies Act, 1964 (Act 7 ~f
1964) which is composed solely ~{members ~fthe Scheduled Tribes".
F
While interpreting the said Regulation framed by the Governor in exer-
cise of powers under Article 244 read with para 5(2) of the Fifth Schedule of
the Constitution, this Court held that the words "transfer of immovable prop-
erty ....... by a person" in.that clause included the transfer by way of grant of
G mining lease by the State Government. Section 3( 1) was interpreted as prohib-
iting any such transfer in favour of a non-scheduled tribe and it was further
declared that such transfer shall be absolutely null and void.

While we have strong reservations with regard to the correctness of the
H majority decision in Samatha s case, which has not only interpreted the pro-
BALCO EMPLOYEES Ul'<ION (REGD.) v. U.O.l. [KIRPAL, J.] 563
visions of aforesaid Section 3(1) of the A.P. Scheduled Areas Land Transfer A
Regulation, 1959 but has also interpreted the provisions of the Fifth Schedule
of the Constitution, the said decision is not applicable in the present case
because the law applicable in Madhya Pradesh is not similar or identical to the
aforesaid Regulation of Andhra Pradesh. Article 145 (3) of the Constitution
provides that any substantial question of law as to the interpretation of the B
provisions of the Constitution can only be decided by a Bench of five judges.
In Samatha's case, it is a Bench of three Hon'ble judges who by majority of
2: 1, interpreted the Fifth Schedule of the Constitution. However, what is im-
portant to note here is, as already observed herein above, that the provisions
of the Madhya Pradesh Land Revenue Code, 1959 and Section 165, in particu-
lar, are not in pari materia with the aforesaid Section 3 of the Andhra Pradesh
c
Regulation.

Section 165 of the M.P. Revenue Code, 1959 deals with transfer of rights
of Bhumiswami. Prior to its amendment on 29th November, 1976, Sub-section
6 of Section 165 reads as follows :- D

"Notwithstanding anything contained in sub-section ( 1), the right
of a Bhumiswami belonging to a tribe which has been declared to be
an aboriginal tribe by the State Government by a notification in that
behalf for the whole or a part of the area to which this Code applies
E
shall not be transferred to a person not belonging to such tribe without
the permission of a Revenue Officer not below the rank of a Collector,
given for reasons to be recorded in writing".

By Section 2 of the M.P. Act No. 61 of 1976 published in the Gazette
on 29th November, 1976, the aforesaid sub-section (6) of Section 165 was F
repealed and was substituted by the following provision:-

"Notwithstanding anything contained in sub-section (I) the right
of Bhumiswami belonging to a tribe which has been declared to be an
aboriginal tribe by the State Government by a notification in that
behalf for the whole or part of the area to which the Code applies
G
shall-

(i) in such areas as are predominately inhabited by aboriginal tribes
and from such date as the State Government may, by notification
specify, not be transferred nor it shall be transferable either by H
564 SUPREME COURT REPORTS [2001] SUPP. 5 S.C.R.
A way of sale or otherwise or as a consequence of transaction of
loan to a person not belonging to such tribe in the area specified
in the notification;

(ii) in areas other than those specified in the notification under clause
(i), not be transferred or be transferable either by way of sale or
B
otherwise or as a consequence of transaction of loan to a person
not belonging to such tribe without the permission of a Revenue
Officer not below the rank of Collector, given for reasons to be
recorded in writing".

c Explanation - For the purposes of this sub-section the expression
"otherwise" shall not include lease.

Sub-section (6) of Section 165, before and after its amendment, does not
contain any provision prohibiting the giving of tribal land by way of lease to
non-tribals. Prior to its amendment, a land could be transferred to a non-tribal
D after getting permission of Revenue Officer not below the rank of Collector
who is required to give his reasons for granting the permission. After amend-
ment on 29th November, 1976 by virtue of provision of sub-section (6), lease
of land is taken out of the purview of sub-section 6(1).

E In the instant case, either the land was acquired and then given on lease
by the State Government to BALCO or permission was given by the District
Collector for transfer of private land in favour of BALCO. This was clearly
permissible under the provisions of Section 165(6) as it then stood and it is too
late in the day, 25 years after the last permission was granted, to hold that
because of this disinvestment;_ it must be presumed that there is a transfer of
F land to the non-tribal in the year 2001 even though the land continues to remain
with BALCO to whom it was originally transferred. The giving of land to
BALCO on lease was in compliance with the provisions of Section 165(6) of
the Revenue Code. Moreover, change of management or in the shareholding
docs not imply that there has now been any transfer of land from one company
G to another. If the original grant of lease of land and permission to transfer in
favour of BALCO between the years 1968 and 1972 was valid, then, it cannot
now be contended that there has been another transfer of land with the Gov-
ernment having been reduced it's stake to 49%. Even if BALCO had been a
non-public sector undertaking the transfer of land to it was not in violation of
H the M.P. Land Revenue Code. The decision of this Court in Samatha's case
BALCO EMPLOYEES UNION (REGD.) v. U.0.1. [KIRPAL, !.] 565
(Supra) is inapplicable in the present case as the statutory provision here does A
not contain any absolute prohibition of the type contained in Section 3( I) of
the Andhra Pradesh Regulation, which was the basis of the decision in Samatha>·
case.

Transferred Case No. 9 of 2001.
B
Shri B.L. Wadhera has, in recent years, become a persistent Public
Interest Litigant who has to his credit fairly large number of Writ Petitions filed
in the Delhi High Court. Not to miss an opportunity, soon after the bid of
Sterlite was accepted on 21st February, 2001, promptly Wadhera filed Writ
Petition in the Delhi High Court within two days i.e. on 23rd February, 2001
which is Transferred Case No. 9 of2001 challenging the said decision. Wadhera
c
is not an employee of the company, nor was he a prospective bidder. He
contended that he had been closely connected with public sector undertakings
and therefore, had the locus standi to file the Writ Petition challenging the said
disinvestment by filing what he terms as a Public Interest Litigation.
D
Public Interest Litigation, or PIL as it is more commonly known, entered
the Indian judicial process in 1970. It will not be incorrect to say that it is
primarily the judges who have innovated this type of litigation as there was a
dire need for it. At that stage, it was intended to vindicate public interest where
fundamental and other rights of the people who were poor, ignorant or in
E
socially or economically disadvantageous position and were unable to seek
legal redress were required to be espoused. PIL was not meant to be adversarial
in nature and was to be a cooperative and collaborative effort of the parties and
the Court so as to secure justice for the poor and the weaker sections of the
community who were not in a position to protect their own interests. Public
Interest Litigation was intended to mean nothing more than what words them- F
selves said viz., 'litigation in the interest of the public'.

While PIL initially was invoked mostly in cases connected with the relief
to the people and the weaker sections of the society and in areas where there
was violation of human rights under Article 21, but with the passage of time, G
petitions have been entertained in other spheres. Prof. S.B. Sathe has summa-
rised the extent of the jurisdiction which has now been exercised in following
words :-

"PIL may, therefore, be described as satisfying one or more of the
following parameters. These are not exclusive but merely descriptive: H
566 SUPREME COURT REPORTS [2001] SUPP. 5 S.C.R.
A • Where the concerns underlying a petition are not individualist
but are shared widely by a large number of people (bonded
Jabour, undertrial prisoners, prison inmates).

• Where the affected persons belong to the disadvantaged sections
of society( women, children, bonded Jabour, unorganised labour
B
etc.).

• Where judicial Jaw making is necessary to avoid exploitation(inter-
country adoption, the education of the children of the prosti-
tutes).
c
• Where judicial intervention is necessary for the protection of the
sanctity of democratic institutions(independence of the judiciary,
existence of grievances redressal forums).

D • Where administrative decisions related to development are harmful
to the environment and jeopardize people's to natural resources
such as air or water".

There is, in recent years, a feeling which is not without any foundation
that Public Interest Litigation is now tending to become publicity interest
E litigation or private interest litigation and has a tendency to be counter-produc-
tive.

PIL is not a pill or a panacea for all wrongs. It was essentially meant to
protect basic human rights of the weak and the disadvantaged and was a
procedure which was innovated where a public spirited person files a petition
F in effect on behalf of such persons who on account of poverty, helplessness or
economic and social disabilities could not approach the Court for relief. There
have been, in recent times, increasingly instances of abuse of PIL. Therefore,
there is a need to re-emphasize the parameters within which PIL can be resorted
to by a Petitioner and entertained by the Court. This aspect has come up for
G consideration before this Court and all we need to do is to recapitulate and re-
emphasize the same.

What Public Interest Litigation is meant to be has been explained at
length in S.P. Gupta v. Union of India and Anr., [1981] Supp. SCC 87. Public
H Interest Litigation in that case was filed relating to the appointment and transfer
BALCO EMPLOYEES UNION (REGO.) v. U.0.1. [KIRPAL, J.] 567
of judges and it is in this connection that the question arose with regard to the A
locus standi of the Petitioner to file the Writ Petition. While deciding this
aspect, this Court examined as to what is the nature of the Public Interest
Litigation and who can initiate the same. At page 215, Bhagwati J. observed
as follows :-

" .. .It is for this reason that in public interest litigation - litigation B
undertaken for the purpose of redressing public injury, enforcing
public duty, protecting social, collective, 'diffused' rights and interests
or vindicating public interest, any citizen who is acting bona fide and
who has sufficient interest has to be accorded standing ... "

The limitation within which the Court must act, and the caution
c
against the abuse of the same is referred to by Bhagwati J. at page 219 as
follows :-

"24. But we must be careful to see that the member of the public, who
approaches the court in cases of this kind, is acting bona fide and not D
for personal gain or private profit or political motivation or other
oblique consideration. The Court must not allow its process to be
abused by politicians and others to delay legitimate administrative
action or to gain a political o~iective. Andre Rabie has warned that
"political pressure groups who could not achieve their aims through E
the administrative process" and we might add, through the political
process, "may try to use the courts to further their aims". These are
some of the dangers in public interest litigation which the court has to
be careful to avoid. It is also necessary for the court to bear in mind
;hat there is a vital distinction between locus standi and justiciability

.. and it is not eve1y d~fault on the part of the State or a public authority
that is justiciable. The court must take care to see that it does not
overstep the limits ~fits judicial.function and trespass into areas which
F

are reserved to the Executive and the Legislature by the Constitution.
It is a fascinating exercise for the court to deal with public interest
litigation because it is a new jurisprudence which the court is evolving G
ajurisprudence which demands judicial statesmanship and high crea-
tive ability. The frontiers of public law are expanding far and wide and
new concepts and doctrines which will change the complexion of the
law and which were so far as embedded in the womb of the future, are
beginning to be born. H
568 SUPREME COURT REPORTS [2001] SUPP. 5 S.C.R.
A 25. Before we part with this general discussion in regard to locus
standi, there is one point we would like to emphasise and it is, that
cases may arise where there is undoubtedly public injury by the act or
omission of the State or a public authority but such act or omission also-
causes a specific legal injury to an individual or to a specific class or
B group of individuals. In such cases, a member of the public having
sufficient interest can certainly maintain an action challenging the
legality of such act or omission, but if the person or specific class or
group of persons who are primarily injured as a result of such act or
omission, do not wish to claim any relief and accept such act or
omission willingly and without protest, the member of the public who
c complains of a secondary public injury cannot maintain the action, for
the effect of entertaining the action at the instance of such member of
the public would be to foist a relief on the person or specific class or
group of persons primarily injured, which they do not want."

D Emphasis added

In Sachidanand Pandey and Am: v. State of West Bengal and Ors.,
[1987] 2 SCC 295, V. Khalid, J. observed as follows :-

"61. It is only when courts are apprised of gross violation of funda-
E mental rights by a group or a class action or when basic human rights
are invaded or when there are complaints of such acts as shock the
judicial conscience that the courts, especially this Court, should leave
aside procedural shackles and hear such petitions and extend its juris-
diction under all available provisions for remedying the hardships and
F miseries of the needy, the underdog and the neglected. I will be second
to none in extending help when such help is required. But this does not
mean.that the doors of this Court are always open for anyone to walk
in. It is necessary to have some self-imposed restraint on public interest
..
litigants''.
G After referring to the decision in Subhash Kumar v. State ~f Bihar and
Ors., [ 1991] 1 SCC 598 and other cases on the point, in Janata Dal v. H.S.
Chowdhm)• and Ors., [1992] 4 SCC 305, it was observed at page 348 as
follows :-

H "109. It is thus clear that only a person acting bona.fide and having
BALCO EMPLOYEES UNION (REGD.) v. U.0.1. [KIRPAL, l.] . 569
sufficient interest in the proceeding of PIL will alone have a locus A
standi and can approach the court to wipe out the tears of the poor and
needy, suffering from violation of their fundamental rights, but not a
person for personal gain or private profit or political motive or any
oblique consideration. Similarly, a vexatious petition under the colour
of PIL brought before the court for vindicating any personal griev- B
ances, deserves rejection at the threshold".

Referring to the litigants standing in queues waiting for the cases to be
listed in Courts at page 349, Pandian, J. had observed as follows:-

" ... the busybodies, meddlesome interlopers, wayfarers or officious c
interveners having absolutely no public interest except for personal
gain or private profit either for themselves or as proxy of others or for
any other extraneous motivation or for glare of publicity break the
queue muffling their faces by wearing the mask of public interest
litigation, and get into the courts by filing vexatious and frivolous
D
petitions and thus criminally waste the valuable time of the courts and
as a result of which the queue standing outside the doors of the Court
never moves which piquant situation creates a frustration in the minds
of the genuine litigants and resultantly they lose faith in the adminis-
tration of our judicial system."
E
While dealing with a case where PIL had been filed in relation to an
award of contract, the factors which the Courts have to consider have been
dealt with in the following observations in Raunaq International Ltd. v. /. V.R.
Construction Lid. and Ors., (1999] 1 SCC 492 at page 502.

"17. Normally before such a project is undertaken, a detailed consid- F

- eration of the need, viability, financing and cost-effectiveness of the
proposed project and offers received takes place at various levels in the
Government. If there is a good reason why the project should not be
undertaken, then the time to object is at the time when the same is
under consideration and before a final decision is taken to undertake G
the project. If breach of law in the execution of the project is appre-
hended, then it is at the stage when the viability of the project is being
consiciered that the objection before the appropriate authorities includ-
ing the court must be raised. We would expect that if such objection
or material is placed before the Government, the same would be H
570 SUPREME COURT REPORTS [2001] SUPP. 5 S.C.R.
A considered before a final decision is taken. It is common experience
that considerable time is spent by the authorities concerned before a
final decision is taken regarding the execution of a public project. This
is the appropriate time when all aspects and all objections should be
considered. It is only when valid objections are not taken into account
B or ignored that the court may intervene. Even so, the court should be
moved at the earliest possible opportunity. Belated petitions should not
be entertained.

18. The same considerations must weigh with the court when interim
orders are passed in such petitions. The party at whose instance interim
c orders are obtained has to be made accountable for the consequences
of the interim order. The interim order could delay the project, jettison
finely worked financial arrangements and escalate costs. Hence the
petitioner asking for interim orders in appropriate cases should be
asked to provide security for any increase in cost as a result of such
D delay or any damages suffered by the opposite party in consequence
of an interim order. Otherwise public detriment may outweigh public
benefit in granti,1g such interim orders. Stay order or injunction order,
if issued, must be moulded to provide for restitution."

Lastly, we need only to refer to the following observations in the major-
E ity decision in Narmada Bachao Ando/an case (supra) at page 763.

"232. While protecting the rights of the people from being violated in
any manner utmost care has to be taken that the court does not
transgress its jurisdiction. There is, in our constitutional framework a
fairly clear demarcation of powers. The court has come down heavily
F
whenever the executive has sought to impinge upon the court's juris-
diction.

233. At the same time, in exercise of its enormous power the court
should not be called upon to or undertake governmental duties or
G functions. The courts cannot run the Government nor can the admin-
istration indulge in abuse or non~use of power and get away with it.
The essence of judicial review is a constitutional fundamental. The role
of the higher judiciary under the Constitution casts on it a great
obligation as the sentinel to defend the values of the Constitution and
H the rights of Indians. The courts must, therefore, act within their
BALCO EMPLOYEES UNION (REGD.) v. U.0.1. [KIRPAL, l.] 571
judicially permissible limitations to uphold the rule of law and harness A
their power in public interest. It is precisely for this reason that it has
been consistently held by this Court that in matters of policy the court
will not interfere. When there is a valid law requiring the Government
to act in a particular manner the court ought not to, without striking
down the law, give any direction which is not in accordance with law. B
In other words, the court itself is not above the law.

234. In respect of public projects and policies which are initiated by
the Government the courts should not become an approval authority.
Normally such decisions are taken by the Government after due care
and consideration. In a democracy welfare of the people at large, and c
not merely of a small section of the society, has to be the concern of
a responsible Government. If a considered policy decision has been
taken, which is not in conflict with any law or is not ma/a.fide, it will
not be in public interest to require the court to go into and investigate
those areas which are the function of the executive. For any project D
which is approved after due deliberation the court should refrain from
being asked to review the decision just because a petitioner in filing
a PIL alleges that such a decision should not have been taken because
an opposite view against the undertaking of the project, which view
may have been considered by the Government, is possible. When two E
or more options or views are possible and after considering them the
Government takes a policy decision it is then not the function of the
court to go into the matter afresh and, in a way, sit in appeal over such
a policy decision".

It will be seen that whenever the Court has interfered and given direc- F
tions while entertaining PIL it has mainly been where there has been an element
of violation of Article 21 or of human rights or where the litigation has been
initiated for the benefit of the poor and the underprivileged who are unable to
come to Court due to some disadvantage. In those cases also it is the legal rights
which are secured by the Courts. We may, however, add that Public Interest G
Litigation was not meant to be a weapon to challenge the financial or economic
decisions which are taken by the Government in exercise of their administrative
power. No doubt a person personally aggrieved by any such decision, which
he regards as illegal, can impugn the same in a Court of law, but, a Public
Interest Litigation at the behest of a stranger ought not to be entertained. Such H
572 SUPREME COURT REPORTS (2001] SUPP. 5 S.C.R.
A a litigation cannot per se be on behalf of the poor and the downtrodden, unless
the Court is satisfied that there has been violation of Article 21 and the persons
adversely affected are unable to approach the Court.

The decision to disinvest and the implementation thereof is purely an
administrative decision relating to the economic policy of the State and chal-
B lenge to the same at the instance of a busy-body cannot fall within the param-
eters of Public Interest Litigation.

On this ground alone, we decline to entertain the writ petition filed by
Shri B.L. Wadhera.
c Writ Petition (Civil) No. 194 ~f 2001

This writ petition has been filed under Article 32 of the Constitution by
BALCO challenging various show cause notices issued to them by authorities
in the State of Chhattisgarh. In our opinion, it will not be appropriate for this
D Court to entertain the challenge to the said show cause notices in this petition.
The petitioners have adequate remedy open to it under the Acts under which
the notices had been issued and, in appropriate case, can approach the High
Court under Article 226 of the Constitution. This writ petition is thus not
entertained as alternative remedy is available to the petitioner.

E Conclusion:

In a democracy, it is the prerogative of each elected Government to
follow it's own policy. Often a change in Government may result in the shift
in focus or change in economic policies. Any such change may result in
F adversely affecting some vested interests. Unless any illegality is committed in
the execution of the policy or the same is contrary to law or mala fide, a
decision bringing about change cannot per se be interfered with by the Court.

Wisdom and advisability of economic policies are ordinarily not amena-
ble to judicial review unless it can be demonstrated that the policy is contrary
G to any statutory provision or the Constitution. In other words, it is not for the
Courts to consider relative merits of different economic policies 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. Here the
policy was tested and the Motion defeated in the Lok Sabha on !st March,
H 2001.
BALCO EMPLOYEES UNION (REGD.) v. U.0.1. [KIRPAL, J.] 573
Thus, apart from the fact that the policy of disinvestment cannot be A
questioned as such, the facts herein show that fair, just and equitable procedure
has been followed in carrying out this disinvestment. The allegations of lack
of transparency or that the decision was taken in a hurry or there has been an
arbitrary exercise of power are without any basis. It is a matter of regret that
on behalf of State of Chattisgarh such allegations against the Union of India B
have been made without any basis. We strongly deprecate such unfounded
averments which have been made by an officer of the said State.

The offer of the highest bidder has been accepted. This was more than
the reserve price which was arrived at by a method which is well recognised
and, therefore, we have not examined the details in the matter of arriving at c
the valuation figure. Moreover, valuation is a question of fact and the Court
will not interfere in matters of valuation unless the methodology adopted is
arbitrary [see Duncans Industries Ltd. v. State of U.P. and Ors.. [2000] I SCC
633].
D
The ratio of the decision in Samatha's case (supra) is inapplicable here
as the legal provisions here are different. The land was validly given to BALCO
a number of years ago and today it is not open to the State of Chattisgarh to
take a summersault and challenge the correctness of it's own action. Further-
more even with the change in management the la~d remains with BALCO to
whom it had been validly given on lease. E

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. Every matter of public interest F
or curiosity cannot be the subject matter of PIL. Courts are not intended to and
nor should they conduct the administration of the country. Courts will interfere
· only if there is a clear violation of Constitutional or statutory provisions or non-
compliance by the State with it's Constitutional or statutory duties. None of
these contingenci~s arise in this present case.
G
In the case of a policy decision on economic matters, the Courts should
be very circumspect in conducting any enquiry or investigation and must be
most reluctant to impugn the judgement of the experts who may have arrived
at a conclusion unless the Court is satisfied that there is illegality in the decision
~ H
574 SUPREME COURT REPORTS [2001] SUPP. 5 S.C.R.
A Lastly, no ex-parte relief by way of injunction or stay especially with
respect to public projects and schemes or economic policies or schemes should
be granted. It is only when the Court is satisfied for good and valid reasons,
that there will be irreparable and irretrievable damage can an injunction be
issued after hearing all the parties. Even then the Petitioner should be put on
B 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.

It is in public interest that there should be early disposal of cases. Public
Interest Litigation should, therefore, be disposed of at the earliest as any delay
will be contrary to public interest and thus become counter-productive.
c
For the aforesaid reasons stated in this judgment, we hold that the
disinvestment by the Government in BALCO was not invalid. Transferred Case
(Civil) Nos. 8, 9 and 10 of 200 I are dismissed. The parties will, however, bear
their own costs.

D B.S. T.C. and Petition dismissed.