Disinvestment of a company basically means the action of an organization or government selling or liquidating an asset or subsidiary. It is also known as “divestiture“. It may also be a reduction in capital expenditure, or the decision of a company not to replenish depleted capital goods. Thus Disinvestment refers to the sale or liquidation of an asset or subsidiary of an organization or equity and bond capital by the government to the private sector. It also implies the sale of government’s loan capital in PSUs through securitization. However, it is the government and not the PSUs who receive money from disinvestment. In the BALCO Disinvestment case, Supreme Court considered the complex questions relating to effect of disinvestment on the employees and workers and whether the questions of policy and administrative matters and decision can be heard by Supreme Court. The Supreme Court delivered a very elaborate, exhaustive and thoughtful opinion on various issues related to the aspects of disinvestment. Through this article I have tried to analyze in brief the concept of disinvestment, discuss the case and relate it with the aspects of company law. FACTS
BALCO (M/s. Bharat Aluminium Company Limited) was incorporated in 1965 as a Government of India Undertaking under the Companies Act, 1956. It had a paid-up share capital of Rs. 488.85 crores. The company was engaged in the manufacture of aluminum and had plants at Korba in the State of Chhatisgarh and Bidhanbag in the State of West Bengal. The Company had integrated aluminium manufacturing plant for the manufacture and sale of aluminium metal including wire rods and semi fabricated products.
In, 1996 the Ministry of Industry (Department of Public Enterprises) constituted a Public Sector Disinvestment Commission initially for a period of three years in pursuance of the Common Minimum Programme of the United Front Government at the Centre. On 12th January, 1998 the earlier Resolution was partly modified by...
Please join StudyMode to read the full document