Limited scope of judicial interference in economic policy decisions and the need for a fair and transparent process in disinvestment.

JUDGMENT :

PRAKASH SHRIVASTAVA, J.

1. By this public interest petition, the petitioner who is stated to be an ex-MLA and a Member of Parliament has challenged the transfer of share of the respondent no. 5, Metro Dairy Limited (for short ‘MDL’) to the respondent no. 10, Keventer Agro Limited (for short ‘KAL’).

2. The respondent no. 5, MDL was a limited company incorporated under the Companies Act, 1956 in pursuance to the joint venture agreement dated 31st of May, 1993 executed by the respondent no. 7, West Bengal Corporative Milk Products Limited (for short ‘BEN’ respondent no. 10 and the National Dairy Development Board, (for short ‘NDDB’). The share holding pattern of the MDL since inception was as follows:

3. Subsequently, NDDB had sold its 10% shares to ICICI and the same were acquired by the respondent no. 10, KAL, on 21st of March, 2014. The plea of the petitioner in the writ petition is that by the newspaper reports in or about 22nd of August, 2017, the petitioner came to know that the respondent State was considering the proposal to disinvest the equity on MDL for which in May, 2017, e-auction open tender was floated and the respondent no. 10 had submitted a bid to buy out the shares. It is stated that the respondent no. 10 had offered Rs. 85.5 crores as against the base price of Rs. 85.43 crores and on 24th of August, 2017, the petitioner came to know through the newspaper reports that West Bengal Cabinet had approved the proposal to disinvest the Government’s equity in MDL. Thereafter, disinvestment was carried out and respondent no. 10 became the owner of 100% shares in MDL. The allegation in the petition is that the shares have been sold to respondent no. 10 at a very low price without following any transparent process and without any justifiable reason. The prayer in the writ petition is to appoint a high powered committee headed by a sitting Judge of the High Court to investigate the transfer of shares, to declare the transfer of shares of MDL as illegal and recall the transaction and also to declare the e-auction process to be colourable exercise of power.

4. Submission of Shri Bikash Ranjan Bhattacharyya, learned Senior Counsel for the petitioner is that 47% shares of MDL have been sold to the respondent no. 10 for Rs. 85.5 crores whereas subsequently, the respondent no. 10 had sold 15% shares to Mandala Capital valued at Rs. 170 crores. Thus, when the respondent State sold its shares in MDL to respondent no. 10, the value attached to 1% share was Rs. 1.8 crores but subsequently, when respondent no. 10 sold it 15% shares to Mandala Capital, the value attached to 1% share was Rs. 11.3 crores and going by this calculation, the value of 47% shares of the State was Rs. 533 crores which has been sold at a very low price of Rs. 85.5 crores. He has further submitted that the opaque process of sale of shares has been adopted, no publication in wellknown newspapers has been done and there was only one bidder whose bid has been accepted. It is further submitted that the entire auction is on the basis of the letter of the respondent no. 10 dated 9th of July, 2015 (Annexure-R2) and that the condition of deposit of non-refundable amount of Rs. 10 lakhs in the NIT was a tailor-made condition to favour the respondent no. 10 and that MDL was not running in loses, therefore, there was no necessity to sale its shares. It is further submitted that the writ petition, on the basis of the newspaper reports, can very well be entertained. In support of his submission, learned Counsel for the petitioner has placed reliance upon the judgment of the Hon’ble Supreme Court in the matter of Aggarwal and Modi Enterprises (P) Ltd. vs. New Delhi Municipal Council, (2007) 8 SCC 75, Reliance Telecom Limited and