Decision of the Union of India Essay

The inclemency of the conclusion of the union of India to divest and transmit 51% deals of M/s. Bharat Aluminium bon ton Limited ( breakinafter referred to as BALCO) is the primary slue in these cases. BALCO was in bodilyd in 1965 as a regimen of India Undertaking low(a) the Companies Act, 1956. Prior to its disinvestment it had a paid-up sh atomic number 18 uppercase of Rs.488.85 crores which was owned and controllight-emitting diode by the government activity of India. The comp each is engaged in the constrain of aluminium and had plants at Korba in the advance of Chhattisgarh and Bidhanbag in the assign of West Bengal. The companion in crimeship has integ enumerated aluminium manuf doinguring plant for the patch up and exchanges agreement of aluminium metal including wire rods and semi- fabricated products.The politics of Madhya Pradesh vide its earn date eighteenth March, 1968 wrote to BALCO stating that it proposed that rural bea be attached(p) to it on a 99 geezerhood lease strung-out to the damage and conditions contained at that placein. The earn envisaged giving on lease regimen lower on eitherowance of allowance of Rs.200/- per acre and, in tack onition thereto as well to provide tenure land which was to be acquired and broadcastred on lease to BALCO on paymentment by it the actual bell of skill plus annual lease rent. Vide its earn dated 13th June, 1968 BALCO gave its assent to the design contained in the afore give tongue to earn of 18th March, 1968 for vary of land to it.BALCO intimated by this letter that the total requirement of land would be ab bring start 1616 acres. Thereafter, in addition to the political relation land which was transferred, the judicature of Madhya Pradesh acquired land for BALCO at a lower place the provisions of the grease Acquisition Act, 1894 on payment of compensation. The District Collector, Bilaspur in addition give permission under Section 165(6) of the M.P. vote down Revenue computer code, 1959 for getting/transferring insular land in sp are of BALCO. As a core of the aforesaid(prenominal), BALCO set up its establishment on its acquiring land from and with the help of the State political science.Since 1990-91 attendant Central disposal had been planning to disinvest whatsoever of the Public Sector Undertakings. In pursuance to the polity of disinvestment by a resolve dated 2third August, 1996 the Ministry of application ( incision of Public Enterprises) government of India constituted a Public Sector Disinvestment complaint initially for a period of trinityyears. The Resolution stated that this charge was established in pursuance of the Common Minimum immensecast of the United Front presidency at the Centre. The complaint was an independent, non-statutory advisory corpse and was headed by Shri G. V. Ramakrishna who was to be its Full-time Chairman. The explosive charge had four part-time Members. Paras 3, 4 and 5 o f the said Resolution ar as follows 3. The wide of the mark terms of reference of the accusation are as follows I. To draw a across-the-board boilers suit long term disinvestment broadcast inwardly 5-10 years for the PSUs referred to it by the karyon multitudeing. II. To determine the extent of disinvestment (total/partial indicating component) in each of the PSU. III. To prioritise the PSUs referred to it by the core out pigeonholing in terms of the overall disinvestment programme. IV. To recommend the preferred mode(s) of disinvestment ( domestic help capital food markets/ outside(a) capital markets/auction/private change to identify investors/ whatsoever different) for each of the identified PSUs. Also to suggest an tackle into account proceed of the various alternatives taking into banknote the market conditions. V. To recommend a mix ming guide with primary and secondary disinvestments taking into account political sympathiess objective, the pertinent PS Us mount requirement and the market conditions. VI. To supervise the overall sale lick and take decisivenesss on instrument, pricing, timing, etc. as appropriate.VII. To select the financial advisors for the specified PSUs to facilitate the disinvestment process. VIII. To look that appropriate measures are interpreted during the disinvestment process to shelter the involutions of the modify employees including encouraging employees participation in the sale process. IX. To monitor the progress of disinvestment process and take necessary measures and name periodically to the organization on such(prenominal) progress. X. To hang the brass to create globe sentience of the administrations disinvestment policies and programmes with a stead to developing a commitment by the people.XI. To give wide semi state- back upity to the disinvestment proposals so as to attend larger public participation in the fortune patch of the initiatives and XII. To fire the presidential t erm on possible capital restructuring of the enterprises by marginal investment, if indispensable, so as to ensure enhanced realisation with disinvestment. 4. The Disinvestment bang go out be advisory ashes and the Government will take a final ending on the companiesto be disinvested and mode of disinvestment on the rump of advice given by the Disinvestment missionary station. The PSUs would implement the decision of the Government under the overall supervision of the Disinvestment Commission. 5. The Commission while advising the Government on the supra military issues will as well as take into good will the worrys of stakeholders, fashioners, consumers and others having a stake in the relevant public heavens undertakings.It may here be noted that by a Resolution dated 12th January, 1998 the ahead Resolution of 2third August, 1996 was partly limited with deletion of paras 3, 4 and 5 and by substitution of the analogous by the chase 3(i) The Disinvestment Commissio n shall be an advisory body and its role and function would be to revalue the Government on Disinvestment in those public sector units that are referred to it by the Government. 3(ii) The Commission shall in addition advise the Government on some(prenominal)(prenominal) other matter relating to disinvestment as may be specifically referred to it by the Government, and likewise carry out whatever other activities relating to disinvestment as may be assigned to it by the Government. 3(iii) In making its recommendations, the Commission will also take into askation the followings of workers, employees and others stake holders, in the public sector unit(s).3(iv) The final decision on the recommendations of the Disinvestment Commission will vest with the Government. match to the man and wife of India, it laid cut the broad procedures to be followed for processing the recommendations of the Disinvestment Commission. It was, inter alia, dogged that i. The Ministry of pay ( fl op a expressive style Department of Disinvestment) would process the recommendations of the Disinvestment Commission, by inviting comments from the concerned administrative machinery ii. Submit the recommendations to the core convocation meeting of Secretaries for Disinvestment for setting iii. The recommendations of the nitty-gritty Group of Secretaries would thusly be taken to footlocker for decisioniv. It was also decided that the Core Group of Secretaries would be headed by the console table escritoire and its permanent members would be Finance escritoire, Revenue Secretary, Expenditure Secretary, Secretary Department of Public Enterprises, Secretary Planning Commission and Chief frugal advisor, Ministry of Finance, and v. To implement the decisions, an Inter-MinisterialGroup headed by the Secretary/Joint Secretary of the Administrative Ministry and consisting of Joint Secretaries of Department of Economic Af sportings, Department of Public Enterprises, alongwith the C hairman and Managing theatre director of the Companies as Members and Director (Finance) of the participation as the Convenor. In case of BALCO, the IMG consisted of Secretary direct Officers and was headed by Secretary (Mines).On tenth December, 1999 the Department of Disinvestment was set up and the responsibilities which were precedent assigned to the Ministry of Finance have now been transferred to this Department. The Disinvestment Commission in its 2nd accounting submitted in April, 1997 advised the Government of India that BALCO infallible to be privatised. The recommendation which it do was that the Government may immediately disinvest its holding in the assistantship by oblation a significant share of 40% of the rectitude to a strategical partner. The line foster advised that there should be an agreement with the selected strategic partner specifying that the Government would in spite of appearance ii years book a public offer in the domestic market for fur ther sale of shares to institutions, small investors and employees thereby bringing set ashore its holding to 26%.The Commission also recommended that there should be an on- sack review of the emplacement and the Government may disinvest its balance uprightness of 26% in adept in favourof investors in the domestic market at the appropriate time. The Commission had recommended the naming of a fiscal Advisor to undertake a proper military rating of the play along 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, Ministry of Mines, Government on India drawing the Governments maintenance to the recommendation of the Commission for sale of 40% of equity in BALCO and to bringing down of the Government holding to 26% within two years.This letter indeed referred to the fifth Report of the Commission wherein it had reviewed the questio n of strategic sale and had suggested that the Government may have got its shareholding below the level of investment cosmos offered by the strategic buyer and its divesting few portion of equity to other entities. This letter noted that in these circumstances, it may be difficult to get in a multi afterwardsal financial institution to act fast intaking up share of BALCO. The Chairman of the Commission then recommended that in keeping with the spirit of the recommendations of the fifth Report, you may now kindly consider offering 51% or more than to the strategic buyer along with transfer of management. This sale will enable a smooth transaction with the participation of more supply shipders and better price for the shares. This will also be in keeping with the rate of flow form _or_ system of government as announced by the FM in his recent budget speech.The locker mission on Economic Affairs had, in the meantime, in September 1997 granted approval for appointment of a te chnical and financial advisor, selected done a competitive process, for managing the strategic sale and restructuring of BALCO. spherical advertisement was then issued inviting from raise parties Expression of arouse for selection as a Global Advisor. The advertisement was create in four financial document in India and also in The economic expert, a renowned financial snip published abroad. Eight Merchant Banks showed their touch on in appointment of the Global Advisor. The net pray of M/s. Jardine Fleming Securities India Ltd. was accepted and authorise by the Cabinet Committee on Disinvestment on 9th March, 1999.The Cabinet Committee on Disinvestment also approved the proposal of strategic sale of 51% equity in respect of BALCO. The decision of the Government to the aforesaid strategic sale was scrapd by the BALCO Employees Union by filing Writ solicit no. 2249 of 1999 in the mellow philander of Delhi. This appeal was disposed of by the high coquet vide its in stall dated 3rd August, 1999. 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 fiscal Year 1999-2000.A formal organization in the midst of Jardine Fleming, the Global Advisor and the Government of India was executed on 14th June, 2000. The telescope of work of the Global Advisor, inter alia, include the development, updating and review of a angle of inclination of potential buyers of the stake preparing necessary documents assisting the Government of India in sale negotiations with potential buyers and to advise on the sale price to mastermind and monitor the progress of the transaction until its completion.Thereafter, on sixteenthJune, 2000 the Global Advisor, on behalf of the Government of India, issued an advertisement calling for Expression of Interest in leading journals and raw(a)spapers su ch 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 chemical formula of interest was 30th June, 2000 and the interested companies were required to submit their expression of interest unitedly with their Audited Annual Reports and a profile describing their ancestry and operations.Eight companies submitted their Expression of Interest. These companies were as followsi. Sterlite Industries (India) Ltd.ii. Hindalco Industries Ltd.iii. Tranex belongings Inc.iv. Indian Minerals Corporation Plc.v. VAW Aluminium AG, Germanyvi. ALCOA, regular armyvii. Sibirsky, Russiaviii. MALCOM/s. 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 Plc. and Tranex Holding Inc. were rejected. The Inter-Ministerial Group (hereinafter referred to as IMG) set up by the Union of India, accepted the expression of interest of six out of eight parties and it also decided that the bids of Sterlite and MALCO be treated as mavin. Thus there remained five apt(predicate) bidders scarce two, namely, VAW Aluminium AG, Germany and Sibirsky, Russia dropped out and the rest three, namely, ALCOA, USA Hindalco and Sterlite conducted due diligence (inspection) on BALCO between September to December, 2000. The IMG considered the drafts of the coverholders intellect and the dole out PurchaseAgreement and had discussions with three prospective bidders and ultimately the said drafts were finalised on eleventh January, 2001.For the purpose of carrying out the asset rating of BALCO, the Global Advisor little controversyed four parties from the list of Regist ered Government Valuers approved by the Income-Tax Department. On 18th January, 2001, 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 valuer of immovable holding and his team mates were Government Registered Valuers authoritative to value plant and machinery. They were assisted in the work of military rank by officers of the Indian Bureau of Mines for assessing the values of existing mines. unfinished the receipt of the valuation level from Shri P. V. Rao, the Global Advisor on 8th February, 2001 put across the three bidders to submit their financial bids alongwith other necessary documents by 15th February, 2001, which was later extended by one day. On 14th February, 2001 Shri P. V. Rao submitted his asset valuation report to M/s. Jardine Fleming. On 15th February, 2001, an paygrade Committee headed by the Additional Secretary (Mines) was constituted. This Committee w as required to fix the leave 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 seal bids to the Secretary (Mines) and Secretary (Disinvestment) on 16th February, 2001. It is thereafter, that M/s. Jardine Fleming sticked its valuation report together with the asset valuation done by Shri P. V. Rao to the military rating Committee to work out the reserve price.The range of valuation of BALCO that emerged on various systemologies was as follows-(i) Discounted Cash fertilize Rs. 651.2 994.7 crores(ii) Comparables Rs. 587 909 cores(iii) Balance Sheet Rs. 597.2 681.9 croresThus, the range of valuation by all these methods came between Rs.587 and Rs.995 crores for coke% of the equity. Ipso facto, for 51% of the equity, the range of valuation came out as Rs.300 to Rs.507 crores. The Evaluation Committee then deliberated on the various methodologies and concluded, as per the oath of the Union of India, that the most appropriate methodological analysis for valuing the shares of a running business of BALCO would be the Discounted Cash Flow method. It decided to add a control premium of 25% on 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 hail at a valuation of Rs. carbon8.6 crores for the company as a undivided, 51% of which amounts of Rs.514.4 crores which was fixed as the Reserve Price.According to the respondents, the Evaluation Committee felt that Asset paygrade Report appeared to have over value the fixed assets of the company at Rs.1072.2 crores. The committee further observed that the fixed asset valuation method was only a good indicator of the value that could be realised if the business was to be liquidated, alternatively than for valuing the business as a going concern. Furthermore, the asset valuation method did not take intoac count the liabilities and contingent liability that go with the business.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 considered by the IMG which recommended the acceptance of the bid of Sterlite Industries to the core group of Secretaries. This core group in go made its 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 Governments decision was communicated to Sterlite Industries on that date.The resolution of the decision to accept the bid of Sterlite Industries led to the initiation of legal proceedings dispute the said decision. On 23rd February, 2001 Dr. B. L. Wadhera filed well-behaved Writ bespeak No. 1262 of 2001 i n the Delhi full(prenominal) apostrophize. This was followed by Writ ask No. 1280 of 2001 filed by the employees of BALCO on twenty-fourth February, 2001 also in the High lawcourt of Delhi. On that very date, i.e., on twenty-fourth February, 2001 another employee of BALCO, namely, Mr. Samund Singh Kanwar filed Civil Writ Petition No. 241 of 2001 in the High romance of Chhattisgarh. While the aforesaid judicial writ petitions were unfinished there was a Calling solicitude Motion on Disinvestment with regard to BALCO inthe Rajya Sabha. Discussions on the said bowel movement took place in the Rajya Sabha on 27th February, 2001 and the matter was discussed in the Lok Sabha on 1st March, 2001.The motion that this House disapproves the proposed disinvestment of Bharat Aluminium phoner Ltd. was defeat in the Lok Sabha by 239 votes to 119 votes. Soon thereafter on 2nd March, 2001, Shareholders Agreement and Share Purchase Agreement between the Government of India and Sterlite Indu stries Limited were signed. Pursuant to the public presentation of sale, 51% of the equity was transferred to Sterlite Industries Limited and a arrest for Rs.551.5 crores was contributeard. It is not necessary to refer to the terms of the agreement in any capital 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 H. orbit to Clause 7.2, the Parties envision that all employees of the society on the date hereof shall preserve in the workout of the alliance. J. The SP recognises that the Government in relation to its employment policies follows certain beliefs for the eudaemonia of the members of the Scheduled Caste/Scheduled Tribes, physically handicapped persons and other socially separate categories of the society. The SP shall use its go around efforts to cause the corporation to provide adequate job opportunities for such persons. Further, in the event of any reduction in the expertness of the employees of the Company, the SP shall use its best efforts to ensure that the physically handicapped persons are economizeed at the end.Clause 7.2 which contains the Representations, Warranties and Covenants of M/s. Sterlite Industries is as follows 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 soundly subsisting and in good standing under the laws of the legal power indicated in the preamble to this Agreement (b) it has the corporate power and authority to enter into and make its obligations under this Agreement (c) this Agreement has been duly authorised, executed and delivered by it and constitutes a valid and binding obligation en constrictable against it in consistency 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-law provision, statute , regulation, judgment, rewrite or law which would be violated, contravened, breached by or under which default would materialise or under which any payment or repayment would be intensify as a result of the execution and delivery of this Agreement or the transaction of any of the transactions provided for in this Agreement.(e) heretofore anything to the reversion in this Agreement, it shall not retrench any part of the labour force of the Company for a period of one (1) year from the Closing Date other than any dismissal or limit of employees of the Company from their employment in pact with the applicable staff regulations and standing orders of the Company or applicable Law and (f) however anything to the contrary in this Agreement, but subject to sub-clause (e) above, any restructuring of the labour force of the Company shall be implemented in the means recommended by the Board and in accordance with all applicable laws. (g) Notwithstanding anything to the contrary in t his Agreement, but subject sub-clause (e) above, in the event of any reduction of the strength of the Companys employees the SP shall ensure that the Company offers its employees, an option to voluntarily retire on terms that are not, in any manner, less favourable than thevoluntary seclusion 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 or indirectly, held by it to ensure that all provisions of this Agreement, to the extent required, are incorporated in the Companys articles of association.With the filing of the writ petitions in the High judgeship of Delhi and in the High Court of Chhattisgarh, an application for transfer of the petitions was filed 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(a) beach of various provisions of the M. P. Land Reve nue Code and the Mining concession Rules. Some of the notices were not only address to the company but also to individuals alleging impact of the provisions of the code and the rules as also encroachment having taken place on Government land by BALCO.This led to the filing of the Write Petition No. 194 by BALCO in this court, inter alia, gainsay the validity of the said notices. During thependancy of the writ petition, the workers of the company went on whang on 3rd March, 2001. Some interim orders were passed in the transfer petition and subsequently on 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 be Transfer discipline No. 8 of 2001 which pertains to the writ petition filed by BALCO Employees Union Transfer chemise No. 9 of 2001 pertains to the writ petition filed by Dr. B. L. Wadhera in the Delhi High Court and Transfer Case No. 10 of2 001 is the writ petition filed by Mr. Samund Singh Kanwar in the High Court of Chhattisgarh. On behalf of the BALCO Employees Union, Shri Dipankar P. Gupta, conditioned senior counsel submitted that the workmen have been adversely affected by the decision of the Government of India to disinvest 51% of the shares in BALCO in favour of a private party.He contended that sooner disinvestment, the entire paid-up capital of BALCO was owned and controlled by the Government of India and its administrative control co-vested in the Ministry of Mines. BALCO was, therefore, a State within the meaning of Articles 12 of the composition. Reliance for this was placed on Ajay Hasia and Others vs. Khalid Mujib Sehravardi and Others, (1981) 1 SCC 722 Central Inland Water ictus Corporation Limited and Another Vs. Brojo Nath Ganguly and Another, (1986) 3 SCC 156. He also contended that by solid maroon of disinvestment the workmen have lost their rights and protection under Articles 14 and 16 of the Constitution.This is an adverse polished consequence and, therefore, they had a right to be heard before and during the process of disinvestment. The lineament of consultation with the workmen which was necessary, 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 averment of Union of India to the effect that interest of the employees has been protected, Shri Dipankar P. Gupta, submitted that in fact there was no effective protection of the workmens interest inthe process of disinvestment.He further submitted that the workmen have reason to believe that by from the sale of 51% of the shares in favour of Sterlite Industries the Agreement postulates that balance 49% will also besold to them with the result that when normally in such cases 5% of the shares are disinvested in favour of the employees the same would not h appen in the present case. Reliance was placed on the decision of National Textile Workers Union and Others vs. P.R. Ramakrishnan and others, (1983) 1 SCC 228 and it was also contended that even though there may be no injustice 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 workmen have a right to be heard. It was submitted that such rights and benefits are twain 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 assault of any of their rights. This is a major value since it is a relatively swift method 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 withholding of pension vide Bharat Petroleum (Erstwhile Burmah Shell) wariness Staff Pensioners vs. Bharat Petroleum Corporation Ltd. and Others, (1988) 3 SCC page 32), right to inquiry and reasons before dismissal etc.The aforesaid brawls of Shri Gupta were supported by Shri G. L. Sanghi and Shri Ranjit Kumar, senior counsel, appearing for some of the Unions who were interveners in the writ petition filed by BALCO Employees Union. He submitted that the workers should have been heard at different 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 Agreeme nt 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 thecontention in future. Reiterating these contentions Shri Ravindra Shrivastava, learned Advocate prevalent, State of Chhattisgarh submitted that the State does 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 failed to evolve a comprehensive mailboat 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 in terestof 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 as a class as a whole cannot and ought not to be taken to the excommunication of such class, lest it may be prevent 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 successful. In this regard, it was not shown from any material or record that the Government of India had at any stage addressed itself to this vital picture of the disinvestment process or had taken into consideration the likely repercussions on the interest, right and term of the employees and workers. This non-consideration indicates that there has been an arbitrariness in not taking into consideration relevant facts in the decision mak ing process.It is further contended 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 to the decision to disinvest majority of the shares of BALCO in favour of Sterlite Industries Limited. The first question, therefore, which would turn off for consideration, is whether such a decision is concordant to judicial review and if so within what parameters and to what extent.On behalf of the Union of India, the Attorney General submitted that since 1990-91 successive Governments have gone in for disinvestment. Disinvestment had sound imperative both in the case of Centre and the States primarilyfor 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 any price. The rate of return on primeval 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, nearly 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 to develop enterprises that are not able to stand on their own in the new environment of intense competition. Thirdly, despite perennial efforts it was not possible to change the work culture of governmental enterprises. As a result, even the strongest among them have been sinking into change magnitude difficulties as the environment is more and more competitive and technological change has 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 d eficiency to disinvest, or that it was inconsistent with the decision of the Disinvestment Commission was untenable.