New Delhi: The Supreme Court on September 16 restrained the government from going ahead with the disinvestment of Hindustan Petroleum Corporation Limited (HPCL) and Bharat Petroleum Corporation Limited (BPCL) without Parliament approval.

Allowing the appeals filed by the Centre for Public Interest Litigation and Oil Sector Officers Association, a Bench comprising Justice S Rajendra Babu and Justice G P Mathur said the government cannot go ahead with disinvestment of the oil sector PSUs "without appropriate parliamentary legislation".

The Bench took note of the fact that the two companies were acquired by the government after passing an appropriate legislation in Parliament in 1974.

The Bench agreed with the petitioners that the government should have approached Parliament for enacting a suitable law for privatisation of the two companies, which were in 1974 acquired through a Parliamentary legislation.

OSOA's counsel, senior advocate Fali S Nariman, said the petitioner was not against the decision to privatise public sector undertakings. "What it was opposing was the manner of privatisation of the oil PSUs, which were in the strategic sector," he added.

Notwithstanding the pendency of petition challenging the decision to privatise the two oil refiners, the government had gone ahead with due diligence of HPCL.

Suitors for government's 34.01 per cent stake in HPCL began due diligence on August 5. Reliance Industries Ltd was the first firm to initiate the process and after it scrutinised the books and installations, British oil and gas major BP Plc visited the data room for the due diligence.

The Supreme Court had on September 5 reserved its verdict on petitions challenging the government's decision to privatise oil refiners HPCL and BPCL without seeking Parliamentary approval.

The government had prayed that the Act of Parliament nationalising various companies in 1974 were of two kinds – one, which imposed a specific bar on the government to lower its stake below 51 per cent and the other, which did not contemplate any such condition.

The Acts nationalising banks and coal mines specifically provided that the government at all times shall hold not less than 51 per cent of the paid up capital but similar provision was not there in the Act for nationalisation of oil PSUs.

PTI