The Supreme Court on Thursday ordered a CBI probe into the sale of a 26% stake in
(HZL) by the government in 2002, which converted the PSU into a private entity controlled by
. The court, however, cleared the path for the government to sell another 29.54% of HZL shares held by it in open market.
Sterlite Opportunities and Ventures (SOVL) had acquired the 26% stake in April 2002 for Rs 445 crore. The value was estimated on the basis of the then stock market price of Rs 40.50 a share. SOVL later picked up 20% from the market and bought another 18.92% from the government in November 2003, increasing its ownership to 64.92%.
A plea was filed in court in 2014 seeking to stall any more disinvestment in HZL on the ground that this would only compound alleged illegalities committed in the earlier rounds.
The CBI, which registered a preliminary inquiry into the sale in December 2013, filed a closure report in the top court regarding the sale on March 6, 2017, stating that the preliminary inquiry did not show facts that would warrant the registration of a criminal case.
This was overruled by the top court on Thursday. The CBI will probe and periodically submit status reports of its investigation every quarter, the court said.
The court raised several questions over the 2002 round of divestment, made during the time of the AB Vajpayee government.
These included a “severe undervaluation” in the company’s valuation and a decision to sell 26% stake instead of 25% which would have allowed the government to retain control over HZL. The 2002 sale reduced the government stake below the 51% needed to be a majority stakeholder. The government’s share prior to the sale was 75.92%.