2013 INSC 0701
Ehsan Khalid
v.
Union of India Thr. Secretary & Others
(Supreme Court Of India)
HON'BLE MR. JUSTICE R.M. LODHA HON'BLE MR. JUSTICE MADAN
B. LOKUR
Writ Petition (Civil) No. 429 Of 2013 | 05-08-2013

1. Permission to argue in-person is granted.

2. In this Writ Petition (Public Interest Litigation), the issue with regard to
divestment of 10% equity of Coal India Limited (CIL) in October 2010 has
been raised. It is alleged that powerful financial institutes usurped the natural
resources only on payment of Rs. 15,200 Crores and caused loss to the
exchequer of Rs. 1.75 Lakh Crores to the nation. According to the petitioner,
the proposal of equity disinvestment was neither legal nor transparent. The
existing norms and government laid down policies were flouted.

3. On July 15, 2013, this Court directed the petitioner, who appears in-person, to
serve a copy of the Writ Petition along with all annexures to Mr. D.S. Mahra,
advocate-on-record, to enable Mr. Siddharth Luthra, learned Additional
Solicitor General, to take instructions in the matter.

4. We have heard Mr. Ehsan Khalid, petitioner-in-person and Mr. Siddharth
Luthra, learned Additional Solicitor General.

5. Mr. Siddharth Luthra placed before us Office Memorandum dated 03.08.2013
alongwith annexures. He stated that entire process of Initial Public Officer
(IPO) of CIL was carried out in a transparent manner and as per the rules and
regulations laid down by the Securities and Exchange Board of India (SEBI).
The procedure is laid down in the Securities and Exchange Board of India
(Issue of Capital and Disclosure Requirements) Regulations, 2009 (ICDR). As
required by ICDR, intermediaries such as Book Running Legal Managers, legal

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counsel (domestic and international), advertising agency, register, etc. were
appointed to guide the deal and to give the professional advise at every stage.
All these appointments were made on competitive basis.

6. As regards the valuation, it was brought to our notice that, inter alia, three
valuation methodologies which investors typically use were applied. These
three methodologies are - (i) EV (Enterprise Value)/EBITDA (Earnings before
Interest, Tax, Depreciation and Amortization), (2) Price to Earnings (Ration of
Market price to earning per share of a company) and (3) Price to Book (Ratio of
current market price to book value of each share of the company).

7. As per the first methodology, a price band of Rs. 220-238 per share was
calculated. In second methodology, a price band of Rs. 234-246 per share was
arrived at. As per third methodology, a price band of Rs. 128-135 per share was
arrived at. Finally, the price band for IPO was fixed at Rs. 226-245 per share.

8. The petitioner alleges that the assets valuation methodology was not adopted
which is the most appropriate methodology of valuation.

9. What was involved in the present case was not the sale of assets but sale of
equity capital. If after following the ICDR and on taking into consideration the
relevant methodologies of valuation for sale of equity capital the price band of
Rs. 226-245 per share was fixed, it cannot be said that the price band so fixed
was unreasonable or sale of 10% equity capital by CIL was unfair. Where
challenge is laid to a government policy, particularly economic policy, this
Court does not interfere in such policy matter in its power of judicial review
unless the impugned policy is found to be grossly arbitrary or unfair or
unreasonable or irrational or violative of constitutional provisions or contrary to
statutory provision.

10. In view of what we have discussed above, we are satisfied that no case for
interference in the policy matter in our extra-ordinary jurisdiction under Article
32 of the Constitution of India is made out.

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11. Writ Petition (PIL) is, accordingly, dismissed in limine.

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