Summary
The Court declined to restrain sale of the Union’s residual 29.54 per cent stake in Hindustan Zinc, which had already ceased to be a government company through earlier disinvestment not challenged in this petition. Separately, it directed a regular CBI case concerning the 2002 sale because the preliminary-enquiry material disclosed a prima facie cognizable offence. The earlier summary dismissal of a similar public-interest petition did not bar substantive adjudication here.
Issues
- Whether an earlier summary dismissal barred the petition by res judicata.
- Whether the nationalisation statute required amendment before sale of the residual minority shareholding.
- Whether the CBI’s preliminary-enquiry closure could stand despite material supporting registration of a regular case.
Provisions considered
- Section 11, Code of Civil Procedure, 1908Res judicata principles apply to bona fide public-interest litigation, but the earlier non-speaking summary dismissal contained no substantive merits adjudication. (¶¶ 30, 31, 32, 33, 34, 35)
- Sections 7 and 9, Metal Corporation (Nationalisation and Miscellaneous Provisions) Act, 1976The statutory vesting provisions did not bar sale of the residual stake after the earlier unchallenged transactions had ended the company’s government-company status. (¶¶ 40, 41, 42, 43, 44, 45, 48)
- Section 617, Companies Act, 1956The Union’s shareholding had fallen below the statutory fifty-one per cent threshold in 2002, so HZL was no longer a government company. (¶¶ 38, 44, 47)
Held
- A bona fide public-interest adjudication on the merits can bind the public, but procedural doctrines must not allow an unreasoned threshold dismissal to foreclose genuine public-interest scrutiny. The earlier summary order did not bar this petition. (¶¶ 31, 32, 33, 34, 35, 60)
- The validity of the earlier disinvestments was outside the first prayer. Since those transactions had become final and HZL had ceased to be a government company, Centre for Public Interest Litigation concerning HPCL and BPCL was distinguishable. No express or implied bar prevented disposal of this residual stake on the pleaded facts. (¶¶ 38, 44, 45, 46, 47, 48)
- The Union could act as shareholder to sell its residual holding, subject to a transparent lawful process realizing the best price. The Court recorded that SOVL would not exercise its second call option and the Government proposed an open-market sale complying with SEBI requirements. (¶¶ 48, 60)
- A preliminary enquiry determines whether cognizable-offence information exists, not its ultimate truth. Once sufficient prima facie material emerges, a regular case must be registered. Exceptional constitutional intervention remains available despite an agency decision to close the enquiry. (¶¶ 53, 54, 55, 56)
- Unanswered concerns in the enquiry material about the sale decision, bidding and valuation justified a regular investigation. These were prima facie concerns, not findings of criminal guilt or final resolution of valuation disputes. The Court avoided identifying individuals in a manner prejudicing investigation. (¶¶ 57, 58, 60, 61)
- The petitioners were not entitled to the closure report on their claimed relationship to a complainant: that individual was not before the Court, and the CBI stated that its enquiry originated in earlier source information. (¶ 59)
Result
Petition partly allowed. Residual-share disinvestment was not restrained on the asserted statutory ground. CBI directed to register a regular case concerning the 2002 disinvestment and submit investigation status reports quarterly, or as otherwise directed.