India Intelligence Report

 

 

   Disinvestment Not for Judicial Review

  Removing a major obstacle to disinvestment, the Supreme Court (SC) threw out a case filed by a labor union challenging the sale of a Government-owned hotel citing a Disinvestment Commission (DC) report recommending the sale of this non-core asset.
 

 

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Removing a major obstacle to disinvestment, the Supreme Court (SC) threw out a case filed by a labor union challenging the sale of a Government-owned hotel citing a Disinvestment Commission (DC) report recommending the sale of this non-core asset.

The former Federal Government under the National Democratic Alliance (NDA) had disinvested non-core assets and one of those disinvestments was the sale of 6 of the 33 loss-making and poorly run India Tourism Development Corporation (ITDC) hotels. While one of those propositions went through the others are in advanced stage of discussions or embroiled in some politically inspired controversy or the other. The communists who think they are helping the country by supporting labor issues have instigated their cadre in various unions to file cases or protest the sale. These unions who are mainly responsible for the shoddy maintenance, poor service delivery, and high cost operation cost (because of their ridiculously high salaries) have protested, filed judicial injunctions, and threatened prospective buyers of murder if they went ahead with the sale. This is the primary reason for the delays in executing the sale or leasing of the other properties.

The SC verdict pointedly focused on the several factors regarding this sale. Firstly, it said that as evident from the DC report and subsequent acceptance by a Cabinet Committee on Disinvestment and inter-Ministerial Group, the former Government followed a process of study, review, and transparency. Secondly, the NDA Government only implemented the recommendations of the DC without exceeding the brief in terms of percentage of disinvestment or compromising the rights of the employees. Thirdly, citing the ruling of Bharat Aluminium Company (BALCO), the SC said the decision to disinvest was a policy decision and was not contrary to any law. Fourthly, the SC pointed out that the decision to disinvest was the decision of the Government’s part of its shares and not by the management of the public sector company ITDA which manages these hotels and therefore it said that ITDA did not violate any service contracts with employees. Fifthly, the SC observed that since the union members of the hotel were not Government employees but those of the public sector employees, their service contracts will be governed by the new owner under the current labor laws. Sixthly, the SC also said that through a transparent process, the Government had ensured that it got a fair price for its investment in ITDA and the rights of the employees were safeguarded.

Given these facts, the SC said that the union workers had no basis for a case.

The SC decision has come at an opportune time as the subject of disinvestment been debated at various forum. Looking at a 10% growth rate with a 3.8% fiscal deficit, the United Progressive Alliance (UPA) Government has been battling its communist allies and regional allies to disinvest non-performing assets in non-core sectors. Often these investments will function well if they are outside the ambit of the Government and becomes private sector operations driven by profits and not politics. Except for a handful of public sector units, most Government investments are dead or non-performing that can be better used for social causes such as infrastructure, education, health care, and poverty alleviation. Currently, only communist employees of labor union benefit from a job that they do not perform or inefficiently