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Delhi HC upholds Bailadila mines' transfer to Mittals

Upholding the Centre's decision to privatise the Bailadila iron ore deposits in Madhya Pradesh, the Delhi high court today cleared the transferring of the mines from the National Mineral Development Corporation to the Ispat group-promoted Bailadila Mines Development Company.

A division bench comprising Justice Y K Sabharwal and Justice A K Srivastava in its 40-page judgement dismissed a public interest petition filed by lawyer B L Wadhera challenging the Union government's decision to handover the deposit number 11-B iron ore mine to the joint venture company of the Mittals' Ispat group and NMDC.

While the Mittals held a major 89 per cent equity shares in the JV, NMDC had only 11 per cent shares. It was claimed that Bailadila contains world's best quality iron ore.

Opposing the petition during the course of hearing, the then additional solicitor general Abhisek Manu Singhvi had submitted that the decision to give only a minor share to NMDC was taken in an attempt to reduce the pressure on the corporation.

The judgement said it was not possible to accept the contention of the petitioner that the transfer of iron ore deposits was contrary to the industrial policy on the guidelines framed for transfer of such deposits to private sector.

''We find no ground to interfere in the writ petition filed as public interest litigation and accordingly the writ petition is dismissed,'' the judges said.

They also refuted the main contention of Wadhera that transfer of such deposit in the manner demonstrated in the petition was contrary to the interest and viewpoint of NMDC as it was entirely malafide and amounts to complete sellout by the Central government in distributing the state's largesse in favour of the Mittals.

The bench also did not agree with the contention of the petitioner that the transfer of the deposits in open market would have resulted in the government/NMDC receiving millions of rupees, and that the transfer at throwaway value in favour of Mittals by itself shows the extraneous considerations in the entire deal, that this compromised on public interest and exposed preference for private interest.

''In the facts and circumstances of the case, we are unable to accept this main contention,'' the judges observed.

''We are even otherwise unable to accept the submission that in view of Article 86 and 119 of Memorandum and Articles of Association, it was mandatory on the part of NMDC to reserve the matter for decision of the President. On that, the minister of steel had to seek Cabinet approval before issue of letter dated May 24, 1994. The Cabinet approval was taken before transfer of lease of the joint venture company,'' the judges said.

Having perused the transactions of business rules, we are unable to accept the contention of the petitioner that the decision of the government as contained in the May 24, 1994 letter required the approval of the Cabinet and in absence thereof the decision was without jurisdiction and null and void.

The petitioner had submitted that under the Memorandum and Articles of Association of the company, particularly clauses 86 and 119, the direction to transfer the property of the company could only be issued by the President in writing and such a directive was required to be placed before Parliament. The object is to ensure transparency in the matter so as to safeguard the public interest in the public sector undertakings.

UNI