'Allows Backdoor Entry To Corporations In Defence Sector': Plea In Karnataka High Court Against Privatization Of BEML Ltd.; Notice Issued

A division bench of Chief Justice Ritu Raj Awasthi and Justice Suraj Govindaraj issued the notice while hearing a petition filed by BEML Staff Association and three other Unions of the undertaking.

Senior Advocate Professor Ravivarma Kumar appearing for the recognised Unions submitted,

"A defence establishment is being privatised and absolutely no reasons are furnished. We have been fighting for the last ten years and for the last 6 years, we have been successful in dissuading the Government of India from privatising. Even the Defence Ministry had supported us and said that this is not to be privatised."

He added, "But unfortunately now a new Ministry for privatisation has taken the decision and accordingly it is being privatised. For the first time Expressions of Interest have been invited and therefore we are compelled to come before the court questioning the validity of the decision."

The petition states that Union of India has in 2016, given in principle approval for strategic disinvestment of 26% equity in BEML out of the Government of India Shareholding of 54.03% along with management control of the Respondent No. 2 company.

It is stated that despite objections from within the establishment, supported with facts and figures from government sources, the Respondents have issued a Preliminary Information Memorandum dated January 04, 2021, a global invitation of Expression of Interest (EoI) in respect of the proposed strategic transaction of disinvestment. Further, interested bidders have been received and the evaluation process by the Transaction Advisor is under progress.

The plea states that BEML has a proven track record of making the country self-reliant in respect of the needs of Core Sectors of the economy such as Defence, Rail & Metro, Mining, Construction, Power etc.

"Over 20,000/- families are dependent on the Respondent Company for their livelihood. Any decision of the Respondents to privatise the Respondent Company in any form will lead to a murky future for its employees and the Nation," the plea states.

It is claimed that the Government's approval to sell 26% of the shares of India's leading defence equipment manufacturer, BEML, to a private sector will mark the first time in Indian history that the Ministry of Defence will lose control over one of its own companies and the entire production will go out of control of Central government, thereby resulting in threat to the Security of the Nation.

At the outset, it is submitted that this is an effort of the Government to allow back-door entry to corporations in the defence sector.

The plea prays for an order or declaration delisting BEML from schedule of Companies proposed for strategic disinvestment vide the In-Principle Approval passed on October 27, 2016, in the interest of maintaining the Company's identity as a Defence Public Sector Undertaking.

Further to direct that the Impugned Preliminary Information Memorandum (Expression of Interest), dated January 04, 2021 as void and inoperative.

Kumar prayed for grant of interim relief by way of directing the government to produce a copy of the in principle approval passed on October 27, 2016 and stay the operation of the EOI till the final disposal of the petition. However, the court refused to grant the same and said, "First let the stand of the respondents come on record."

Case Title: BEML Staff Association v. Union of India

Case No: WP 20258/2021