( 1 ) IN this petition, filed on behalf of some of the employees of Bharat Electronics Ltd. , ("bel" for short), the company incorporated under the Companies Act," in the public sector, the petitioners question the procedure adopted by the Union of India in implementing the policy of disinvestment in public sector enterprises, in particular BEL. ( 2 ) THE Industrial Policy Statement of 1991 of the Government of India led to partial disinvestment in selected public sector undertakings. The relevant portion of the said policy statement dated July 24, 1991, is extracted below (see [1991] 71 Comp Cas (St.) 126, 132) : "31. After the initial exuberance of the public sector entering new areas of industrial and technical competence, a number of problems have begun to manifest themselves in many of the" public enterprises. Serious problems are observed in the insufficient growth in productivity, poor project management, over-manning, lack of continuous technological upgradation, and inadequate attention to R and D and human resource development. In addition, public enterprises have shown a very low rate of return on the capital invested. This has inhibited their ability to regenerate themselves in terms of new investments as well as in technology development. The resultis that many of the public enterprises have become a burden rather than being an asset to the Government. The original concept of the public sector has also undergone considerable dilution. The most striking example is the take over of sick units from the private sector. This category of public sector units accounts for almost one third of the total losses of central public enterprises. Another category of public enterprises which does not fit into the original idea of the public sector being at the commanding heights of the economy, is the plethora of public enterprises which are in the consumer goods and services sectors. 32. ft is time, therefore, that the Government adopt a new approach to public enterprises. There must be a greater commitment to the support of public enterprises which are essential for the operation of the industrial economy. Measures must be taken to make these enterprises more growth oriented and technically dynamic. Units which may be faltering at present but are potentially viable must be restructured and given a new lease of life. There must be a greater commitment to the support of public enterprises which are essential for the operation of the industrial economy. Measures must be taken to make these enterprises more growth oriented and technically dynamic. Units which may be faltering at present but are potentially viable must be restructured and given a new lease of life. The priority areas for growth of public enterprises in the future will be the following : * Essential infrastructure goods and services. * Exploration and exploitation of oil and mineral resources. * Technology development and building of manufacturing capabilities in areas which are crucial in the long-term development of the economy and where private sector investment is inadequate. * Manufacture of products where strategic considerations predominate such as defence equipment. At the same time the public sector will not be barred from entering areas not specifically reserved for it. 33. In view of these considerations, the Government will review the existing portfolio of public investments with greater realism. This review will be in respect of industries based on low technology, small scale and non-strategic areas, inefficient and unproductive areas, areas with low or nil social considerations or public purpose, and areas where the private sector has developed sufficient expertise and resources. 34. The Government will strengthen those public enterprises, which fall in the reserved areas of operation or are in high priority areas or are generating good or reasonable profits. Such enterprises will be provided a much greater degree of management autonomy through the system of memoranda of understanding. Competition will also be induced in these areas by inviting private sector participation. In the case of selected enter-prises, part of Government holdings in the equity share capital of these enterprises will be disinvested in order to provide further market discipline to the performance of public enterprises. There are a large number of chronically sick public enterprises incurring heavy losses, operating in a competitive market and serve little or no public purpose. These need to be attended to. The country must be proud of the public sector that it owns and it must operate in the public interest. There are a large number of chronically sick public enterprises incurring heavy losses, operating in a competitive market and serve little or no public purpose. These need to be attended to. The country must be proud of the public sector that it owns and it must operate in the public interest. " (emphasis* supplied) ( 3 ) THIS was reiterated in the Union Budget for 1991-92 presented to Parliament and it was stated that disinvestment of a part of the Government's shareholding was necessary for revitalising the public sector, and such shares will be offered to mutual funds, financial institutions, general public and workers so as to raise resources and encourage wider public participation. ( 4 ) IN pursuance of such policy, the first round of disinvestment was carried out by the Union government in two phases in December, 1991, and February, 1992, in favour of financial institutions, by what is known as the "bundles method" that is by offering bundles consisting of sha'res of nine public sector enterprises, three of which were considered very good, three were good and three were average. During the first round, 20 per cent. Of BEL shares were disinvested in February, 1992, as follows : Name of purchaser No. of shares soldsl. No. 1. Unit Trust of India 1,24,83,100 2. Canbank Mutual Fund 11,80,300 3. SBI Mutual Fund 11,80,300 4. Bank of Baroda 1,85,000 5. BOI Mutual Fund 9,71,300 total 1,60,00,000 ( 5 ) AS the response and results of the first disinvestment were not satisfactory, the Government of India set up an expert committee in February, 1992, to devise the criteria for selection of PSEs for disinvestment and advise on the limits of equity to be disinvested, to lay down the criteria for valuation of shares and suggest the best means of disinvestment. The said committee submitted a report in April, 1993, making several recommendations on the limits of disinvestment and the modus operandi of disinvestment. It suggested that the Government should retain 51 per cent, of the shares to have control over management in the case of units reserved for the public sector (subject to exceptions as indicated ). It was also suggested that there need be no yearwise target for disinvestment, but clear action plans/guidelines should be evolved. It suggested that the Government should retain 51 per cent, of the shares to have control over management in the case of units reserved for the public sector (subject to exceptions as indicated ). It was also suggested that there need be no yearwise target for disinvestment, but clear action plans/guidelines should be evolved. The committee recommended a number of preparatory steps including (i) deciding the desirable level of equity and restructuring the finances with a proper debt/ equity gearing, (ii) assessing the ongoing investment plans of PSEs and examining the scope of issuing convertible bonds as a measure of resource mobilisation for PSEs ; and (iii) desirability of establishing an independent Regulatory commission for the concerned sector, if necessary. In regard to valuation of shares, it noted that the common methods in vogue are net asset value, profit earning capacity and discounted cash flow; and the choice of the method of valuation will depend on the special circumstances affecting the operations of the PSEs and the valuation should be made with considerable circumspection. The committee also identified two acceptable and transparent processes of divestiture; (i) offering shares to the public at a fixed price ; and (ii) sale through auction among a predetermined clientele. It recommended that once a reasonable market price is established in a normal trading atmosphere over a reasonable period of time, the method of offering shares at a fixed price would be appropriate ; and in all other cases, the auction method, with wide participation may be adopted. ( 6 ) THE Comptroller and Auditor-General of India gave a report (No. 14 of 1993), in the year 1993, in regard to the disinvestment of Government shareholding in selected PSEs during 1991-92. The report noted ; (i) The disinvestment exercise was not preceded by adequate preparatory study and no efforts were made to generate widespread investor enthusiasm among financial institutions/mutual funds, about PSEs shares to encourage good response from them. (ii) Inclusion of some of the PSEs in the programme of disinvestment was not proper (as the concerned PSEs and the administrative ministries had advised exclusion of such PSEs, from the disinvestment scheme) resulting in gross under-realisation of sale receipts. (iii) The method adopted for sale, that is, sale of shares of three types of PSEs (very good, good and average) by putting them in common bundles, depressed the value of good shares. (iii) The method adopted for sale, that is, sale of shares of three types of PSEs (very good, good and average) by putting them in common bundles, depressed the value of good shares. (iv) The reserved prices originally fixed by the Government on the basis of accepted criteria, were reduced drastically to enable it to accept the low offers received, resulting in under-realisation of value, estimated at Rs. 3,442 crores. (v) Composition of the bundles of PSE shares for disinvestment were determined even before fixing the reserve price of shares of each PSE resulting in under-quotation by the financial institutions and mutual funds. (vi) The Government committed a strategic blunder in offering shares valued at Rs. 8,000 crores (on the basis of original reserve price) to financial institutions/mutual funds knowing fully that the investible resources of such institutions/funds were only Rs. 2,000 to Rs. 2,500 crores. (vii) The tenders received were not competitive ; that is, during the first phase in the case of several bundles, only single bids were received ; and during the second phase, four out of the nineteen bidders had made 68 per cent. Of the bids ; and (viii) The disinvestment served only to contain the fiscal deficit and not to achieve the declared policy. ( 7 ) THE Comptroller and Auditor-General also noticed some inadequacies in formulating the guidelines for valuation of shares ; viz. , (a) The committee set up for formulating the guidelines for valuation of shares was to be assisted by financial advisers from the ministries ; but the chairman of the committee decided not to associate the financial advisers for want of time and consequently the expertise of the department of expenditure could not be availed of ; and the final report was signed by only four out of 14 members, giving room for an inference that the full expertise was not available for making the report. (b) The Union Government failed to make an appraisal of the several options available, before embarking upon disinvestment, having regard to the suggestions made by the various members of the committee. Some of the suggestions were : (i) the shares should be offered not only to mutual funds/financial corporations, but also to approved share brokers, public limited companies, approved pension funds, etc. Some of the suggestions were : (i) the shares should be offered not only to mutual funds/financial corporations, but also to approved share brokers, public limited companies, approved pension funds, etc. , for bringing more competition and better price and to prevent cartelisation ; and the maximum number of shares to be purchased by each institution should be prescribed ; (ii) The assets of PSEs should be revalued at current price or replacement value for calculating the NAV, as the book value of the PSE shares was very low ; (iii) The rates of capitalisation of the top ten amongst the best public sector undertaking could not be less than the average capitalisation rate obtaining in the first ten best private sector companies whose shares were considered as gilt-edged shares ; (iv) The disinvestment should be considered in stages with a predetermined time schedule ; (v) In the absence of market value, it will be advisable to transfer the shades to selected mutual funds/public financial institutions at reasonable value with a stipulation that as and when these shares are offered to the general public, 90 per cent. Of the price gain should be transferred to the government ; and (vi) If the aim of the Government was only to raise the intended amount prior to March 31, 1992, adopt the short-term solution of raising loans from financial institutions against collateral of shares which could in due course be offered to public, including the financial institutions, and repay the loans from the sale realisations. ( 8 ) THE Government of India issued an advertisement in the newspapers dated March 20, 1994, inviting tenders from the public, for purchase of shares in Central public sector companies including 88 lakh shares of BEL (11 per cent. Of the total paid-up share capital as 'on March 31, 1992) of the faee value of Rs. 10 each. The offer in regard to the second disinvestment opened on March 17, 1994, and closed on March 31, 1994. Feeling aggrieved, the petitioners filed these petitions for the following reliefs ; (a) for quashing the decision of the Union Government to disinvest through the tender system ; (b) for a direction to respondents Nos. 10 each. The offer in regard to the second disinvestment opened on March 17, 1994, and closed on March 31, 1994. Feeling aggrieved, the petitioners filed these petitions for the following reliefs ; (a) for quashing the decision of the Union Government to disinvest through the tender system ; (b) for a direction to respondents Nos. 1 and 2 (Union of India and Department of Public enterprises) to hold prior consultation with affected interests, such as the management of BEL, the negotiating trade unions and the officers' association ; © for a direction to respondents Nos. 1 and 2 to ensure reservation of a substantial proportion of the shares, up to 26 per cent. , for the employees in order that the constitutional goal of workers' participation as laid down in Article 43a is effectively materialised, before further disinvestment (d) for a direction to respondents Nos. 1 to 3 to work out an effective and efficient employees stock option scheme as already suggested by the SEBI and announced by the Government of india, in consultation with the negotiating trade unions ; and (e) for a direction to respondents Nos. 1 and 2 to make adequate preparations and to apply their mind specifically to the criticism made by the Comptroller and Auditor-General, so that the mistakes made in the first round of disinvestment are not repeated, and maximum returns are ensured, while making further disinvestment in future. ( 9 ) A learned single judge of this court having considered the interim prayer, relating to the second round of disinvestment of BEL shares by calling for tenders in March, 1994, passed the following interim order on April 20, 1994 : "since the process of issue of shares has already began, I am not inclined to pass any interim order. However, in so far as the remaining 69 per cent. Of the shares, an interim direction is issued to the respondents Nos. 1 and 2 not to take any decision regarding disinvestment till further orders of this court. " ( 10 ) IN the second round of disinvestment advertised in March, 1994, to an extent of 11 per cent. Of BEL shares, only about 4. 14 per cent. Of shares were sold as detailed below : name of the No. of shares soldpurchaser unit Trust of India 20,00,000 canara Bank 4,40,000 united India Ins. Co. 3,60,000 ltd. Oriental Insurance 2,75,000 co. Of BEL shares, only about 4. 14 per cent. Of shares were sold as detailed below : name of the No. of shares soldpurchaser unit Trust of India 20,00,000 canara Bank 4,40,000 united India Ins. Co. 3,60,000 ltd. Oriental Insurance 2,75,000 co. Ltd. New India 1,35,000 assurance Co. Ltd. GIC Mutual Fund 1,00,000 indira Krishna 500 reddy total 33,10,500 thereafter, the second respondent issued a circular dated June 16, 1995 (annexure "t"), informing the fourth respondent that the Government of India had decided to offer the shares (not exceeding 5 per cent.) in BEL held by the President of India to the regular employees of bel (subject to a maximum of 200 shares per employee) at Rs. 121 per share. This was in turn notified by the fourth respondent to its employees by circulars dated August 16, 1995, and august 22, 1995 (annexures "t-1 and T-2" ). According to the petitioners, the offer price of Rs. 121 per share is arbitrary, discriminatory and exce'ssive ; and it should have been only around rs. 30 per share. Further, the offer of only 5 per cent. Of shares was intended to frustrate the demand of the employees of BEL for 26 per cent. Of the shares. Hence, the petitioners amended the petition by adding the following prayers ; (f) for quashing the circular dated June 16, 1995 (annexure "t"), and the consequential circulars annexures "t-l" and "t-2" ; (g) for a direction to the second respondent to reissue a fresh offer in accordance with law, containing a reasonable price per share after due consultation with recognised trade unions. ( 11 ) THE petitioners also made additional interim prayers including stay of annexures "t", "t-l" and "t-2", and for sale of BEL shares to BEL employees at a price of about Rs. 27 per share. However, the additional interim prayers were not granted. ( 11 ) THE petitioners also made additional interim prayers including stay of annexures "t", "t-l" and "t-2", and for sale of BEL shares to BEL employees at a price of about Rs. 27 per share. However, the additional interim prayers were not granted. ( 12 ) THE claims and contentions put forth by the petitioners raises the following points for consideration : (a) whether the decision of the Government of India regarding the second round of disinvestment by the tender system is against public interest and opposed to the suggestions/recommendations made by the Comptroller and Auditor-General and the expert committee constituted in regard to disinvestment in PSEs ; (b) whether the mistakes pointed out by the Comptroller and Auditor-General in regard to the first round of disinvestment have been repeated during the second round of disinvestment and whether any directions should be issued to the Government of India regarding disinvestment in pses ; © whether the Government of India is bound to hold prior consultation with the management and employees' unions, and negotiations with the unions, as to whether there should be disinvestment, the extent of shares to be offered to the employees and the price for the shares offered to the employees ; (d) whether the Government of India is bound to reserve up to 26 per cent. Of shares for allotment to employees to fulfil the constitutional goal of workers' participation, under Article 45a of the Constitution ; and whether the offer of only 5 per cent. Shares to the employees of pses is arbitrary and irrational ; (e) whether the respondents are bound to work out an employees' stock option scheme in consultation with the unions ; (f) whether the offer price of Rs. 121 to employees of BEL is excessive and unreasonable ; and whether respondents Nos. 1 and 2 are bound to make a fresh offer at a lesser price (preferably around Rs. 27 per share) to the employees of BEL ; (g) whether there is any discrimination in fixing the share price payable by BEL employees when compared to the share price paid by the employees of other similarly placed PSEs. 1 and 2 are bound to make a fresh offer at a lesser price (preferably around Rs. 27 per share) to the employees of BEL ; (g) whether there is any discrimination in fixing the share price payable by BEL employees when compared to the share price paid by the employees of other similarly placed PSEs. Re : Points (a) and (b) : ( 13 ) THE petitioners contend that the Government of India should have excluded BEL from the list of PSEs selected for disinvestment; that even if the shares had to be sold, the Government committed several mistakes in selling 20 per cent. Of the shares of BEL during -the first round of disinvestment at a very low price of Rs. 30 per share ; that the decision to make a second disinvestment of 11 per cent. Of BEL shares was taken in haste, and will result in the sale of shares at rates below market price ; that the Government ought to have proposed the second round of disinvestment by a public issue after generating investor enthusiasm, instead of inviting tenders for sale of shares ; that the Government ought to have fixed the issue price after revaluing the assets of BEL whose book value is grossly undervalued ; that the Government had failed to learn from the mistakes committed during the first disinvestment, in spite of the comptroller and Auditor-General specifically pointing out the inadequacies and mistakes ; and that such hasty disinvestment of the shares will fetch only 10 per cent. Of the actual market value of around Rs. 160 per share. It is also contended that SEBI has issued guidelines for disclosure of the true position of the company for investor protection. But, the brochure issued by the government of India for sale of BEL shares is in violation of such SEBI guidelines. It is contended that a public issue would have resulted in a broader shareholding pattern and given the general public a chance to participate in the disinvestment ; instead, the second disinvestment proposed by the Government will give a golden opportunity to foreign institutional investors, to grab national assets at throw-away prices. The petitioners have, however, made it clear that they are not challenging the disinvestment policy, but only the manner of implementation of the disinvestment policy. The petitioners have, however, made it clear that they are not challenging the disinvestment policy, but only the manner of implementation of the disinvestment policy. ( 14 ) BEFORE examining the contentions of the petitioners, it may be convenient and necessary to bear in min'd the well settled parameters relating to interference by courts in matter of policy and manner of implementation thereof. Policies involving economic and technical issues, will not normally be subjected to judicial review. The courts will examine policies and implementation of policies only to the extent of finding out whether there is any violation of, or inconsistency with, any constitutional or statutory provisions. Reference to some of the decisions on the issue will be relevant. ( 15 ) WE may start with the following observations of Frankfurter J. In Morey v. Doud [1957] 354 us 457 : "in the utilities, tax and economic regulation cases, there are good reasons for judicial self-restraint if not judicial deference to legislative judgment. The Legislature after all has affirmative responsibility. The courts have only the power to destroy, not to reconstruct. When these are added to the complexity of economic regulations, the uncertainty, the liability to error, the bewildering conflict of the experts, and the number of times the judges have been overruled by events, self-limitation can be seen to be the path to judicial wisdom and institutional prestige and stability. " ( 16 ) IN R. K. Garg v. Union of India, AIR 1981 SC 2138 , 2147 ; [19821 133 ITR 239, 255, the supreme Court stated how economic activities should be viewed by courts. It observed : "another rule of equal importance is that laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion, etc. It has been said by no less a person than Holmes J. that the Legislature should be allowed some play in the joints, because it has to deal with complex problems which do not admit of solution through any doctrinaire or strait-jacket formula and this is particularly true in the case of legislation dealing with economic matters, where having regard to the nature of the problems required to be dealt with, greater play in the joints has to be allowed to the Legislature. The court should feel more inclined to give judicial deference to legislative judgment in the field of economic regulation than in other areas where fundamental human rights are involved. " ( 17 ) IN the Telecom case [delhi Science Forum v. Union of India], 1996 I AD (SC ) 1065 , AIR1996 SC 1356 , JT1996 (2 )SC 295 , (1996 )1 MLJ118 (SC ), 1996 (2 ) SCALE218 , (1996 )2 SCC405 , [1996 ]2 SCR767 , the Supreme Court held that the above observations in Morey's case [1957] 354 US 457 and Garg's case AIR 1981 SC 2138 , though made with reference to legislations, were equally applicable to policies of the Government. The supreme Court observed (page 1359) : "what has been said in respect of legislations is applicable even in respect of policies which have been adopted by Parliament. They cannot be tested in a court of law. The courts cannot express their opinion as to whether at a particular juncture or under a particular situation prevailing in the country, any such national policy should have been adopted or not. There may be views and views, opinions and opinions which may be shared and believed by citizens of the country including the representatives of the people in Parliament. But that has to be sorted out in parliament which has to approve such policies. Privatisation is a fundamental concept underlying the questions about the power to make economic decisions. What should be the role of the State in the economic development of the nation ? How shall the resources of the country be used ? How shall the goals fixed be attained ? What are to be the safeguards to prevent the abuse of the economic power ? What is the mechanism of accountability to ensure that the decision regarding privatisation is in public interest ? All these questions have to be answered by the vigilant parliament. Courts have their limitations because these issues rest with the policy makers for the nation. No direction can be given or is expected from the courts unless while implementing such policies, there is violation or infringement of any of the constitutional or statutory provision. The new Telecom Policy was placed before Parliament and it shall be deemed that Parliament has approved the same. This court cannot review and examine as to whether the said policy should have been adopted. The new Telecom Policy was placed before Parliament and it shall be deemed that Parliament has approved the same. This court cannot review and examine as to whether the said policy should have been adopted. Of course, whether there is any legal or constitutional bar in adopting such policy can certainly be examined by the court. " ( 18 ) IN Maharashtra State Board of Secondary and Higher Secondary Education v. Paritosh bhupesh Kurmarsheth, AIR1984 SC 1543 , (1984 )86 BOMLR428 , 1984 (2 ) SCALE30 , (1984 )4 SCC27 , [1985 ]1 SCR29 , 1984 (16 )UJ1107 (SC ), the Supreme court held : ". . . The court cannot sit in judgment over the wisdom of the policy evolved by the Legislature and the subordinate regulation-making body. It may be wise policy which will fully effectuate the purpose of the enactment or it may be lacking in effectiveness and hence calling for revision and improvement. But any drawbacks in the policy incorporated in a rule or regulation will not render it ultra vires and the court cannot strike it down on the ground that in its opinion, it is not a wise or prudent policy, but is even a foolish one, and that it will not really serve to effectuate the purposes of the Act. The Legislature and its delegate are the sole repositories of the power to decide what policy should be pursued in relation to matters covered by the Act and there is no scope for interference by the court unless the particular provision impugned before it can be said to suffer from any legal infirmity, in the sense of its being wholly beyond the scope of the regulation-making power or its being inconsistent with any of the provisions of the parent enactment or in violation of any of the limitations imposed by the Constitution. None of these vitiating factors are shown to exist in the present case. . . None of these vitiating factors are shown to exist in the present case. . . " ( 19 ) IN A. S. Sangwan v. Union of India, AIR1981 SC 1545 , 1981 lablc831 , 1980 Supp (1 )SCC559 , 1980 (12 )UJ519 (SC ), the Supreme Court observed : "a policy once formulated is not good for ever ; it is perfectly within the competence of the union of India to change it, rechange it, adjust it and readjust it, according to the compulsions of circumstances and the imperatives of national considerations. We cannot, as a court, give directives as to how the Defence Ministry should function except to state that the obligation not to act arbitrarily and to treat employees equally is binding on the Union of India because it functions under the Constitution and not over it. In this view, we agree with the submission of the Union of India that there is no bar to its changing the policy formulated in 1964, if there are good and weighty reasons for doing so. We are far from suggesting that a new policy should be made merely because of the lapse of time, nor are we inclined to suggest the manner in which such a policy should be shaped. It is entirely within the reasonable discretion of the Union of india. It may stick to the earlier policy or give it up. But one imperative of the Constitution implicit in Article 14 is that if it does change its policy, it must do so fairly and should not give the impression that it is acting by any ulteria criterion or arbitrarily. . . " ( 20 ) IN Premium Granites v. State of Tamil Nadu AIR1994 SC 2233 , jt1994 (1 )SC 376 , 1994 (1 )SCALE393 , (1994 )2 SCC691 , [1994 ]1 SCR579 , 1994 (2 )UJ145 (SC ), the Supreme Court held ; "it is not the domain of the court to embark upon unchartered ocean of public policy in an exercise to consider as to whether a particular public policy is wise, or a better public policy can be evolved. Such exercise must be left to the discretion of the executive and legislative authorities, as the case may be. Such exercise must be left to the discretion of the executive and legislative authorities, as the case may be. The court is called upon to consider the validity of a public policy only when a challenge is made that such policy decision infringes fundamental rights guaranteed by the Constitution of India or any other statutory right. " ( 21 ) AT this juncture, it may be equally relevant to refer to the Wed-nesbury principle relating to unreasonableness in administrative action, enunciated by Lord Greene M. R. In Associated provincial Picture Houses Ltd. V. Wednesbury Corporation [1947] 2 All ER 680, 682 : "it must always be remembered that the court is not a court of appeal. The law recognises certain principles on which the discretion must be exercised, but within the four corners of those principles the discretion is an absolute one and cannot be questioned in any court of law. . . The exercise of such a discretion must be a real exercise of the discretion. . . Bad faith, dishonesty--those, of course, stand by themselves--unreasonableness, attention given to extraneous circumstances, disregard of public policy and things like that have all been referred to as being matters which are relevant for consideration. . . . It is true that discretion must be exercised reasonably. What does that mean ? Lawyers familiar with the phraseology commonly used in relation to the exercise of statutory discretions often use the word 'unreasonable' in a rather comprehensive sense. It is frequently used as a general description of things that must not be done. For instance, a person entrusted with a discretion must direct himself properly in law. He must call his own attention to the matters which he is bound to consider. He must exclude from his consideration matters which are irrelevant to the matter that he has to consider. If he does not obey those rules, he may truly be said, and often is said, to be acting 'un-reasonably'. Similarly, you may have something so absurd that no sensible person could ever dream that it lay within the powers of the authority. Warrington L. J. , I think, it was who gave the example of the red-haired teacher, dismissed because she had red hair. That is unreasonable in one sense. In another sense it is taking into consideration extraneous matters. Warrington L. J. , I think, it was who gave the example of the red-haired teacher, dismissed because she had red hair. That is unreasonable in one sense. In another sense it is taking into consideration extraneous matters. It is so unreasonable that it might almost be described as being done in bad faith. In fact, all these things largely fall under one head. " ( 22 ) THIS principle was reiterated by the Supreme Court in Tata Cellular v. Union of India [1994] 6 SCC 651. ( 23 ) WE will now examine the, points arising for consideration in the light of the aforesaid principles. ( 24 ) THE policy of disinvestment as such is not under challenge. In fact, the policy of disinvestment, by itself, does not violate any constitutional or statutory provision. But if in implementing the disinvestment policy, the Government selects some PSEs for disinvestment haphazardly without any scheme of guidelines, or if the procedure adopted for sale of shares or the method adopted for fixation of the price of shares, is purely on ad hoc basis, without reference to any principles or guidelines, by failing to take note of matters which are bound to be considered, or by not excluding from consideration, matters which are irrelevant to the subject matter, the court may interfere under Article 226, on the ground that the procedure adopted or the decision is arbitrary, unreasonable and irrational. Courts will not hesitate to interfere where the policy is sound, but in implementing the policy, it is diluted, twisted, mangled and rendered unrecognizable and meaningless. ( 25 ) THE criticism made by the Comptroller and Auditor-General and the PAC and the. Shortcomings pointed out, are all in regard to the first round of disinvestment. But we are not concerned with it. We are concerned with the second round of disinvestment. No doubt, the petitioners have endeavoured to find fault with the second round of disinvestment on the ground that the mistakes committed during the first round of disinvestment have been repeated during the second round. A point to point comparison will demonstrate the correct position : mistakes pointed out in the Position in regard to the first round of disinvestment second round of disinvestment (a) Shares of very good companies like BEL were bundled with shares of average or poor performance companies. A point to point comparison will demonstrate the correct position : mistakes pointed out in the Position in regard to the first round of disinvestment second round of disinvestment (a) Shares of very good companies like BEL were bundled with shares of average or poor performance companies. Clubbing of both profit making and loss making pses resulted in the price of bel shares being depressed. (b) Shares were offered only to financial institutions and mutual funds. [there is no broad base of purchasers. Shares were not offered to general public or employees]. © Shares are not offered to employees. Shares of each PSE were sold separately. "sale of bundle" is not followed. Shares are offered to companies, banks, institutions, mutual funds, brokers, or any other legal entities or persons acting individually or jointly, who are permitted to buy shares in India (including foreign institutional investors permitted by the SEBI ). The range of purchasers is broad-based. Shares are offered to employees at a discount of 15 per cent, on the average last disinvestment price. (d) There was no publicity to develop investor enthusiasm. (e) The bids were invited for 825 bundles, of the average value of Rs. 9. 75 crores each in all about Rs. 8,000 crores. No small bids were permitted. (f) The average price of BEL shares realised was about Rs. 30 per share as against the initial reserve price of Rs. 80 per share. Wide publicity was given in regard to the sale of PSE shares in newspapers. Brochures of PSEs whose shares were offered for sale were made available to prospective buyers in the designated branches of SBI, as also in stock exchanges, branches of ICICI Securities and Finance Co. Ltd. , and the concerned PSEs. Tenders were for a minimum of Rs. 25,000 only, for shares of each company, thereby permitting participation of a large number of applicants. The average disinvestment price was Rs. 142. 50 per share (with a special offer price of Rs. 121 per share for employees ). The reserve price was fixed at Rs. 133 per share as per the procedure decided for disinvestment and only bids received above the reserve price were accepted. Thus, the realisation was more than the reserve price. (g) The reserve price fixed was low without taking note of relevant factors and the sale realisations were even lower than the reserve price. (h) 20 per cent. 133 per share as per the procedure decided for disinvestment and only bids received above the reserve price were accepted. Thus, the realisation was more than the reserve price. (g) The reserve price fixed was low without taking note of relevant factors and the sale realisations were even lower than the reserve price. (h) 20 per cent. Shares were sold at low prices resulting in enormous loss. (i) No proper guidelines of scheme was available and several shortcomings were pointed out by the Comptroller and Auditor-General and by the PAC report. The price realised was in the range of the open market price. The reserve price was fixed with reference to relevant factors. Only 4. 1 per cent. Shares sold as against 11 per cent. Of the shares offered for sale. By ensuring that all sales were at prices above the reserve price, there was no loss. The recommendations of the report of the committee on disinvestment of shares in PSEs kept in mind. The shortcomings noticed by the comptroller and auditor-General and the pac in the first round of disinvestment were avoided. It would be thus seen that there is no basis for petitioners' complaint in regar,d to the second round of disinvestment. ( 26 ) THE petitioners contend that selection of BEL as one of the PSEs for disinvestment, is itself a bad decision. It is contended that even according to the Industrial Policy, 1991, industries manufacturing arms/ammunition and allied items of defence equipment, should be reserved for the public sector ; and the policy statement contemplated manufacture of products, where strategic considerations predominate, such as defence equipment, being considered as a priority area for growth of the public sector in future ; and that BEL produces radars, electronic warfare systems and strategic electronic equipment and defence communication equipment ; that as BEL manufactures defence equipment, it ought to have continued as a 100 per cent. Government owned company, instead of disinvesting a part of the shares held by the Government. But there is no merit in this contention. The Government of India proposes to disinvest shares up to only 49 per cent. Retaining the controlling interest and BEL will continue to be a public sector undertaking even after disinvestment. Further, the Crisil rating report relating to BEL produced by petitioners {annexure "h") makes it clear that BEL is expanding its products in non-defence related items. The Government of India proposes to disinvest shares up to only 49 per cent. Retaining the controlling interest and BEL will continue to be a public sector undertaking even after disinvestment. Further, the Crisil rating report relating to BEL produced by petitioners {annexure "h") makes it clear that BEL is expanding its products in non-defence related items. The relevant portion is extracted below : "the growth of the strategic electronics industry of India is dependent on the budgetary outlay for defence expenditure. The industry has experienced a slow down over the past few years due to the cut back in defence expenditure by the Government. As a result, the customer profile of bel has undergone a change and has shown an increasing trend towards the civilian segment. In 1992-93, civilian sales accounted for nearly 54 per cent. Of the operating income. . . " ( 27 ) IN fact the Government considered this question while taking a decision on investment. The relevant note put up by the Department of Public Enterprises shows that the following reason was considered in the CCEA and only thereafter the decision was taken to disinvest in BEL : "a view was expressed by the Ministry of Defence, Department of Production, that there should be no disinvestment in BEL and BEML on the plea that these PSEs are manufacturing/producing items required by defence also in addition to items required for civil use. This point was considered in the Steering Committee also. In this regard, our view is that these PSEs are not performing 100 per cent. Defence functions. (In fact BDL, which is 100 per cent. Defence-oriented, has been excluded from the list of 38 approved by CCEA ). So far -as PSEs like bel and BEML are concerned they are not totally defence-oriented and could do with some disinvestment which could require them to become a little more competitive and bring them out of their sheltered position. In the MOU exercises we have seen that both could do with a little more openness and disinvestment of this nature could well be the catalyst. Therefore, we feel we should not change our decision in regard to disinvestment in these two PSUs. In the MOU exercises we have seen that both could do with a little more openness and disinvestment of this nature could well be the catalyst. Therefore, we feel we should not change our decision in regard to disinvestment in these two PSUs. Being in the reserved sector (though one could argue that these two PSUs should be taken out of the defence sector) we are unlikely to lose control on them in any way, and, this disinvestment would be of the same nature as in some petroleum sector PSUs. "( 28 ) THE profile of BEL (annexure "d") shows that the manufacture of non-defence items like broadcasting and telecommunication equipment and electronic components like integrated circuits, resistors, glass shells for black and white television tubes and glass parts, opto-electrical items etc. , by BEL, are substantial. Having regard to the manufacturing profile of the company and the avowed purpose of disinvestment, if the Government of India selected BEL for partial disinvestment, retaining the majority of shares, such a policy decision is not open to challenge. ( 29 ) THE petitioners next contend that during the second round of disinvestment, the sale of shares ought to have been at a fixed price by means of a public issue and not by tenders. Sale of shares by public issue or by private placement at a specified rate, is normally the method adopted by companies who want to increase their share capital. But we are not concerned with an offer of shares, by the company. The sale is by the holder of the shares. As the shareholder, the government has the option to sell the shares by tender or by public issue. As the disinvestment is not a fresh public issue by the company, but a sale by the holder of the shares, to its best advantage, it cannot be said that sale by tender is imprudent, particularly when the reserve price has been determined in consultation with merchant bankers (IDBI and ICICI ). In fact, the Expert committee (Rangarajan Committee) report dated April 20, 1993 (annexure "g" produced by petitioner) recommends the sale of shares by tenders in the case of PSEs like BEL, where trading in shares is yet to be established. In fact, the Expert committee (Rangarajan Committee) report dated April 20, 1993 (annexure "g" produced by petitioner) recommends the sale of shares by tenders in the case of PSEs like BEL, where trading in shares is yet to be established. The report considers the merits and demerits of public issue, sale by tender system and negotiated sales as follows : "all the above methods have their own merits and demerits. In the first alternative of 'offer for sale', difficulties may be encountered in estimating and determining the 'fixed' price if it is offered for the first time and the shares have not actually been trading in the stock exchange. On the other hand, this method has the advantage of spreading the ownership widely amongst the general public and in a transparent manner. A prerequisite for this method is to list the shares of enterprises in the stock exchange and establish a track record of trading. In the case of those pses for which the first sale of equity is yet to be made, or those where the track record of trading in shares is yet to be established, the tender system would be advantageous. The last method of negotiated sale has the advantage of direct interface with potential new owners so as to specify the manner of future operation of the enterprise to achieve the best social objectives. But it has the demerit of the potential for long drawn out negotiations and allegations of favouritism. " (emphasis* supplied ). ( 30 ) WE do not therefore, find any infirmity or constitutional or statutory violation in the second round of disinvestment of BEL shares in pursuance of the Government's policy of disinvestment in public sector enterprises. It is possible that the Government of India might have committed some errors in the first round of disinvestment. In the implementation of any new policy, some errors are bound to occur, usually on account of unforeseen factors and inexperience. So long as the mistakes were neither wilful nor with ulterior motives, and as the disinvestment procedures have been improved and shortcomings corrected in the second round, by taking note of the remarks of the Comptroller and Auditor-General and the PAC and the recommendations of the expert committee, we do not find any reason to hold that the second round of disinvestment is either arbitrary or irrational or unreasonable. No doubt, there can be further improvement in the implementation or "effective delivery system" of the policy. But, that by itself is not a ground to set at naught the second round of disinvestment. It is always open to the public, including the petitioners to give suggestions and representations to the Government, to the company and the elected representatives so that a policy can be made more effective and meaningful. On the facts and circumstances, we have no hesitation to answer points (a) and (b) in the negative. Re. : Points © to (g) : ( 31 ) THE petitioners want prior consultation with the company and its employees before disinvestment. The petitioners want 26 per cent. Of the shares to be sold to the employees. The petitioners want an employees stock option scheme to be brought into effect in consultation with the unions. They rely on the decisions of the Supreme Court in National Textile Workers' Union v. P. R. Ramakrishnan AIR1985 SC 75 , [1984 (49 ) FLR399 ], 1986 lablc491 , 1984 (2 )SCALE630 , (1985 )1 SCC120 , 1984 (16 )UJ1084 (SC ), Workmen of rohtas Industries Ltd. V. Rohtos Industries Ltd. (1987 )II LLJ1 SC , (1987 )2 SCC588 , 1987 (Supp)SCC462 , [1987 ]2 SCR1216 , 1987 (2 )UJ318 (SC ) and Navnit r. Kamani v. R. R. Kamani AIR1989 SC 9 , [1989 ]66 Compcas132 (SC ), (1988 )3 Complj162 (SC ), JT1988 (3 )SC 700 , (1989 )I LLJ47 SC , 1987 (2 )SCALE1415 , (1988 ) 4 SCC387 , [1988 ]supp3 SCR123 , (1990 )3 UPLBEC1456. ( 32 ) DISINVESTMENT by the Government is an act of sale of shares in a company by the owner of the shares. In law, a holder of shares in a company does not require the concurrence of the company unless the Articles of association require it. Therefore, prior consultation with the company is not a legal requirement. ( 33 ) DISINVESTMENT of shares up to 49 per cent. Will not change the character of the company. The company will still be a Government company within the meaning of Section 617 of the companies Act, 1956, and continue to be a public sector undertaking. Neither the future of the company as a public sector undertaking, nor the position of employees, is jeopardized by the disinvestment. Will not change the character of the company. The company will still be a Government company within the meaning of Section 617 of the companies Act, 1956, and continue to be a public sector undertaking. Neither the future of the company as a public sector undertaking, nor the position of employees, is jeopardized by the disinvestment. There is no alteration in the conditions of service of the employees nor any threat to their employment on account of such disinvestment. The act of disinvestment does not affect the interests of the employees nor does it have the effect of adversely affecting the conditions of service at present or in future. In fact it contemplates benefits to the employee by offering 5 per cent. Of the shares at a concessional price. Therefore, prior consulation with the employees of the company is also not necessary. ( 34 ) THE Madras High Court in two cases--Southern Structurals Staff Union v. Management of southern Structurals Ltd. [1994] 81 Comp Cas 389 ; [1994] 2 LLJ 1243 and Tamil Steel Staff union v. State of Tamil Nadu [1994] 2 SCL 406 has held that employees have no vested right in the employer continuing to be a Government company ; and the employees cannot claim any right to decide as to who should own the shares of the employer company ; and the status of being employees of a Government company, does not require the prior consultation of such employees, a precondition for disinvestment. ( 35 ) ANY economic reform, including disinvestment in PSEs is intended to shake the system for public good. The intention of disinvestment is to make PSEs more efficient and competitive and perform better. The concept of the public sector and what should be the role of the public sector in the development of the country, are matters of policy closely linked to economic reforms. While it is true that any policy of the Government should be in public interest, it is not shown how prior consultation with employees of a PSE before disinvestment is a facet of such public interest. ( 36 ) THE decisions relied on by the petitioners do not assist them. While it is true that any policy of the Government should be in public interest, it is not shown how prior consultation with employees of a PSE before disinvestment is a facet of such public interest. ( 36 ) THE decisions relied on by the petitioners do not assist them. In the case of National Textile workers' Union v. P. R. Ramakrishnan AIR1983 SC 75 , [1983 ]53 compcas184 (SC ), (1983 )1 Complj1 (SC ), (1983 )I LLJ45 SC , 1982 (2 )SCALE1144 , (1983 )1 SCC228 , [1983 ]1 SCR922 , the question considered and decided was that the workers of a company are entitled to appear at the hearing of a winding up petition either to support or oppose the winding up of the company. In that context, the Supreme Court observed that the workers of a company are as much interested in the company as the shareholders ; and that after the introduction of Article 43a, it is idle to contend that workers should have no voice in the determination of the question whether the enterprise should continue to run or be shut down under the order of court. The Supreme Court made it clear that what was stated was only with reference to the relationship of the workers vis-à-vis the company. In the case on hand, neither the rights of the company nor its workers are affected in any manner by the disinvestment. ( 37 ) THE decision in Workmen of Rohtas Industries Ltd. V. Rohtas Industries Ltd. (1987 )II LLJ1 SC , (1987 )2 SCC588 , 1987 (Supp)SCC462 , [1987 ]2 scr1216 , 1987 (2 )UJ318 (SC ), recognises the fact that the workers' labour results in productivity, in which they have a share. This again is not of any assistance as we are not concerned with a question as to what the workers should get from the company. This again is not of any assistance as we are not concerned with a question as to what the workers should get from the company. In Navnit R. Kamani v. R. R. Kamani AIR1989 SC 9 , [1989 ]66 Compcas132 (SC ), (1988 )3 Complj162 (SC ), JT1988 (3 )SC 700 , (1989 )I LLJ47 SC , 1987 (2 )SCALE1415 , (1988 ) 4 SCC387 , [1988 ]supp3 SCR123 , (1990 )3 UPLBEC1456 , while considering the revival of a sick unit under the Sick Industrial Companies (Special Provisions) Act, 1985, the supreme Court preferred a scheme presented by the workers, in preference to the scheme presented by the shareholders, to run a sick unit, and the value of the shares of the unit was reduced to Re. 1 per share while directing the transfer of shares to the employees. The decision relates to the legislative intent of the Sick Industrial Companies (Special Provisions) Act, 1985, and the scheme was framed in exercise of jurisdiction under Article 142 of the Constitution. The facts, circumstances and the questions involved in that decision were completely different and have no bearing on the question of disinvestment. ( 38 ) THE policy of "disinvestment neither offends the fundamental or statutory rights guaranteed to a worker, nor runs counter to any of the Directive Principles, much less Article 43a. The employees of a public sector undertaking have neither any constitutional nor any statutory right to require the majority shareholder to sell 26 per cent. Of the shares to the employees or to work out a stock options scheme for employees. Nor can they contend that they have a legitimate expectation to get 26 per cent. Shares when Government decided to disinvest a part of its holdings. How much should be disinvested and how much should be given to the employees at a concessional rate is a matter of policy. There was no bar to the employees from applying for shares when Government invites offers for purchasing 11 per cent. Shares. There was no assurance that 26 per cent. Of the shares will be given to the employees at any concessional price. An employees stock option scheme ("esos", for short) can neither be thrust on the employer nor on the employees, much less on a stock holder. Shares. There was no assurance that 26 per cent. Of the shares will be given to the employees at any concessional price. An employees stock option scheme ("esos", for short) can neither be thrust on the employer nor on the employees, much less on a stock holder. The guidelines prepared by the Union finance Ministry for ESOS (annexure "d") makes it clear that the scheme will be voluntary in nature, voluntary on the part of the employer and voluntary on the part of the employees. ( 39 ) THE petitioners contend that the offer price of Rs. 121 per share, for employees is arbitrary and discriminatory and that the offer price should be about Rs. 27 per share. It is contended that the offer price in the case of BEL employees is 79. 6 per cent. Of the market price while in the case of comparable PSUs like ITI, SBI, IOC and ONGC the offer price is much lower. The petitioners have given the offer prices in respect of shares in these undertakings to employees as follows : Market Offer name price price to Percentag of employee e of psu s market price bel 152 121 79. 6 iti 200 59 29. 5 sbi 230 60 26 ioc 800 100 12. 5 580 90 15. 5 ong c respondents have contended that employees of BEL and ITI have been offered shares from out of the shareholding of the President of India under identical schemes ; that the Government of india decided to allot shares in favour of employees of eight PSUs in June, 1993 ; and an identical scheme was later approved in regard to another 13 PSUs ; and employees of all these psus were offered a maximum of 200 shares each, at an offer price based on 15 per cent. Discount on the last available disinvestment price (and not on the market price at the time of offer ). The respondents have produced the list of 21 PSUs in respect of which such offer was made to the employees, that is 8 PSUs in April, 1994, and 15 PSUs in June, 1995. It is seen therefrom that respondents Nos. 1 and 2 have adopted a uniform scheme for offering shares to the employees of several PSUs. In the case of BEL, the average last disinvestment price was Rs. 142 and after a discount of 15 per cent. It is seen therefrom that respondents Nos. 1 and 2 have adopted a uniform scheme for offering shares to the employees of several PSUs. In the case of BEL, the average last disinvestment price was Rs. 142 and after a discount of 15 per cent. The offer price is fixed at Rs. 121. In the case of ITI, the average last disinvestment price was Rs. 69 and the offer price to the employees was fixed at Rs. 59. It is stated that the offer of SBI was not under the said scheme. In so far as IOC and ONGC are concerned, respondents Nos. 1 and 2 have made it clear that the Government of India had not disinvested any part of its shareholding in favour of any of the employees of the said companies ; and the employees of IOC and ONGC were offered shares by the respective companies themselves while issuing fresh shares under the Companies Act, 1956. Therefore, the pricing formula adopted by those companies for allotment of shares to its employees cannot be compared to the method of pricing adopted in the case of BEL. It is thus evident that there is no basis for the complaint of discrimination put forth by the petitioners. ( 40 ) WE will now deal with the grievance that the offer price of Rs. 121 per share to BEL employees, is high. The petitioners have not been able to make out any irregularity, discrimination or arbitrariness in fixing the offer price. The offer price has been fixed by giving a discount of 15 per cent. From the last available disinvestment price. Thus, the offer price has a relevant basis. What should be the discount to be given in the case of employees of the PSEs, is a matter of policy and such policy has been uniformly applied. The petitioners, having all along contended that the share price secured during the first disinvestment was far below the real value and having sought directions to the respondents to take steps to ensure receipt of maximum price during disinvestment, cannot contend, while referring to the offer price to employees, that the basic price assumed is excessive and the shares should be offered to the employees at a price of about Rs. 27 per share, instead of Rs. 121 per share. Thus, no irregularity or discrimination is made out in the offer price. 27 per share, instead of Rs. 121 per share. Thus, no irregularity or discrimination is made out in the offer price. Further, on account of the fact that interim stay was not granted in regard to the offer of shares to BEL employees, such of those employees who were interested in the shares would have already purchased the shares offered by the Government of India at a price of Rs. 121 per share. ( 41 ) HENCE, points © to (g) are also answered in the negative. ( 42 ) THOUGH the petitioners are not entitled to the reliefs sought in this petition, it does not follow that the employees of BEL are not entitled to any relief at all. Article 43a contains one of the directive Principles of State Policy and provides that the State shall take steps, by suitable legislation or in any other way, to secure the participation of workers in the management of undertakings, establishments or other organisations engaged in any industry. Though the said provision is not enforceable by a court and it is not permissible to compel the Government to carry out any directive or to make any law for that purpose, the principle contained in Article 43a is nevertheless fundamental in the governance of the country. . As observed by the Supreme court in Central Inland Water Transport Corporation Ltd. V. Brojo Nath Ganguly, AIR1986 SC 1571 , (1986 )3 Complj1 (SC ), 1986 Lablc1312 , (1986 )II LLJ171 SC , 1986 (1 )SCALE799 , (1986 )3 SCC156 , [1986 ]2 SCR278 , 1986 (2 )SLJ320 (SC ) : "though the court may not be able actively to enforce the Directive Principles of State Policy by compelling the State to apply them in the Government of the country or in the making of laws, the court can, if the State commits a breach of its duties by acting contrary to those Directive principles, prevent it from doing so. State actions, including actions of the instrumentalities and agencies of the State, must not only be in conformity with the fundamental rights guaranteed by part III, but must also be in accordance with the Directive Principles of State Policy prescribed by Part IV. " ( 43 ) THE workers are as much, if not more, a part of the company, as the shareholders of the company. " ( 43 ) THE workers are as much, if not more, a part of the company, as the shareholders of the company. The company has a threefold reality--economic, human and public--each with its own internal logic. The reality of the company is much broader than that of an association of capital ; it is a human working community that performs a collective action for the common good (passage from The Principles of Modern Company Law by Professor Gower and an article by prof. De Wool of Belgium, quoted with approval by the Supreme Court in National Textile workers' Union v. P. R. Ramakrishnan AIR1983 SC 75 , [1983 ]53 compcas184 (SC ), (1983 )1 Complj1 (SC ), (1983 )I LLJ45 SC , 1982 (2 ) SCALE1144 , (1983 )1 SCC228 , [1983 ]1 SCR922 ), In the same decision, the Supreme Court further observes : "it is not only the shareholders who have supplied capital, who are interested in the enterprise which is being run by a company but the workers who supply labour are also equally, if not more interested because what is produced by the enterprise is the result of labour as well as capital. In fact, the owners of capital bear only limited financial risk and otherwise contribute nothing to production while labour contributes a major share of the product. While the former invest only a part of their moneys, the latter invest their sweat and toil, in fact their life itself. The workers, therefore, have a special place in a socialist pattern of society. They are mere vendors of toil ; they are not a marketable commodity to be purchased by the owners of capital. They are producers of wealth as much as capital--nay, very much more. They supply labour without which capital would be impotent and they are, at the least, equal partners with capital in the enterprise. Our Constitution has shown profound concern for the workers and given them a pride of place in the new socio-economic order envisaged in the Preamble and the Directive Principles of State polaicy. . . " ( 44 ) EXPERIMENTS in developed and developing countries have established that participation of workers in the capital of the employer-company by holding shares, will not only improve productivity and loyalty to the industry, but also develop a sense of belonging, resulting in improved employer-employee relationship. . . " ( 44 ) EXPERIMENTS in developed and developing countries have established that participation of workers in the capital of the employer-company by holding shares, will not only improve productivity and loyalty to the industry, but also develop a sense of belonging, resulting in improved employer-employee relationship. When the Directive Principles contemplate workers participating in the management, and the industrial policy contemplates participation of the workers in the capital, there should be a wholehearted effort to make available a substantial portion of shares to the workers on attractive terms while making disinvestment. It should be remembered that the employees do not purchase shares as a mere investment, but on account of a sense of involvement and as a form of security. Obviously, they cannot be equated to members of the general public or institutions purchasing shares as a business proposition or for profit. It is not sufficient to provide for a token allotment to the employees, if they are willing to purchase more shares. ( 45 ) IN the case of BEL, about 30 per cent. of shares have been disinvested in the two rounds of disinvestment. Even if the Government of India intends to retain 51 per cent. about 19 per cent. of shares are still available. The situation is similar in several other PSEs. To give effect to the policy of disinvestment, as intended, there is an immediate need to formulate a scheme for effective workers' participation in the capital also. Such a scheme should, among other relevant matters, provide for (a) the extent of participation by the workers in the capital of the company ; (b) the nature of concessions that should be extended to the workers to enable them to acquire shares by giving a reasonable discount in the share price and by granting reasonable time or instalments for payment of the share price ; and (c) safeguards to ensure that such shares are retained by the workers, either by stipulating that the shares are non-transferable except to other bel employees or by prohibiting transfer during a specified period. ( 46 ) EVEN in regard to the offer price, there is some cause for grievance. Though the disinvestment in favour of workers was mentioned, in the Budget Speech in 1991, the shares were not offered to the employees during the first disinvestment. It was offered only after the second disinvestment. ( 46 ) EVEN in regard to the offer price, there is some cause for grievance. Though the disinvestment in favour of workers was mentioned, in the Budget Speech in 1991, the shares were not offered to the employees during the first disinvestment. It was offered only after the second disinvestment. If the shares had been offered to the employees during the first disinvestment or immediately thereafter, they would have got the shares at far lesser and affordable prices. In the case of BEL, the offer price would have been around Rs. 30 per share, if the shares had been offered before the second disinvestment. By postponing the offer in favour of employees until after the second disinvestment, the offer price has been increased from Rs. 30 to Rs. 121 in the case of BEL. It is seen that in regard to eight of the public sector undertakings, the offer of shares to employees was made in April, 1994, and in regard to 13 companies (including BEL) the offer was made only in August, 1995. It cannot be disputed that if the offer had been made in favour of the employees of any PSE immediately after the first disinvestment, and before the second disinvestment, the offer price would have been much less. These aspects and other relevant matters will have to be taken note of while fixing the offer price to the employees. We are sure that the Government will evolve a satisfactory and appropriate scheme for successful and meaningful implementation of disinvestment. ( 47 ) THOUGH we find that the petitioners are not entitled to the reliefs in the manner sought, we direct the Government to evolve a scheme keeping in view what we have stated in the course of this order (paras 28 to 31 above) as expeditiously as possible. We hasten to add that we are not suggesting formulation of a new policy nor change of the existing policy. All that we are suggesting is an effective and meaningful implementation of the policy in accordance with its letter and spirit. This petition is disposed of accordingly.