CENTRE FOR PUBLIC INTEREST LITIGATION versus UNION OF INDIA AND ANR.

Citation: [2003] SUPP. 3 S.C.R. 746 · Decided: 16-09-2003 · Supreme Court of India · Bench: S. RAJENDRA BABU · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
B 
CENTRE FOR PUBLIC INTEREST LITIGATION 
v. 
UNION OF INDIA AND ANR. 
SEPTEMBER 16, 2003 
[S. RAJENDRA BABU AND G.P. MATHUR, JJ.] 
ESSO (Acquisition of Undertaking in India) Act, 1974-Section 7-
Disinvestment-Procedure required for-Private oil companies acquired 
by the Government by enacting various statutes-Government taking 
C decision to disinvest oil companies by executive decision-No steps to 
repeal or amend the provisions of the statutes-Held, disinvestment cannot 
be made without repealing or amending the statutes-Constitution of 
India-Article 32. 
D 
Interpretation of Statute-Preamble to a statute-Significance a/-
Held, though does not control the statute but can be an aid to construction 
of the statute. 
In the 1970s, the Government of India acquired oil companies, 
E which were till then being run and controlled by private parties. For 
acquiring the companies, Parliament enacted ESSO (Acquisition of 
Undertaking in India) Act, 1974, the Burma Shell (Acquisition of 
Undertaking in India) Act, 1976 and Caltex (Acquisition of Shares of 
Caltex Oil Refining India Limited and all the Undertakings in India 
for Caltex India Limited) Act, 1977. The provisions of all the Acts were 
F identical. The preamble of the Acts stated that the acquisitions were 
being done to ensure that the ownership and control of the petroleum 
products are vested in the State and are so distributed as best to 
subserve the common good. Section 7 of the Acts permitted vesting of 
the right, title, interest and liabilities of the acquired companies in a 
G Government company. The Acts adopted the definition of Government 
company in the Companies Act, 1956 thereby meaning that to be a 
Government company at least 51% shares in the company should be 
owned either by the Central Government or any State Government or 
both. Pursuant to the enactment of the acquisition Acts, the private oil 
H companies were acquired and transferred to Government companies 
746 
CENTRE FOR PUBLIC INTEREST LITIGATION v. U.0.1. 
747 
incorporated under the provisions of the Companies Act, 1956. 
A 
The Central Government took a decision to sell majority of shares 
of two such Government oil companies to private parties. The 
disinvestment was sought to be dorie through an executive decision and 
not by way of repeal or amendment of the statutes by which the B 
companies had been acquired. The action of the Government in 
disinvesting the share of the Government oil companies without 
repealing or amending the statutes was challenged by the petitioner by 
way of a public interest litigation under Article 32 of the Constitution 
of India. 
c 
Justifying the disinvestment of the companies without repealing 
or amending the ESSO (Acquisition of Undertaking in India) Act and 
other Acts, the respondents contended, inter alia, thaf the Acts by 
virtue of which these companies were acquired did not lay down any 
restrictions on the disinvestment of the companies; that the disinvestment D 
would subserve the common good; that subsequent to acquisitions 
several new assets have been acquired by the oil companies and the 
present assets hardly bore any resemblance to the assets acquired 
under the statute; that the disposal of the assets of the company would 
be governed by the provisions of the Companies Act, 1956 and so there E 
was no need for Parliamentary approval or sanction. 
Allowing the petitions and holding that the Government could not 
disinvest without suitably amending the concerned statutes, the Court 
HELD : 1.1. On the language of the ESSO (Acquisition of F 
Undertaking in India) Act, 1974, the method adopted by the Govern-
ment in exercising its executive powers to disinvest the companies without 
repealing or amending the law is not permissible at all. [762-Fl 
1.2. The Preamble to the ESSO (Acquisition of Undertaking in G 
India) Act, 1974 clearly stated that the acquisition is done in order to 
ensure that the ownership and control of petroleum products vested 
in the State and thereby so distributed as best to subserve the common 
good. Preamble though does not control the statute, is an admissible 
aid to construction thereof. [758-A, BJ 
H 
748 
SUPREME COURT REPORTS [2003] SUPP. 3 S.C.R. 
A 
I.3. The ESSO (Acquisition of Undertaking in India) Act, 1974 
sets out that the assets of the undertaking shall vest in the Government 
as provided under Section 3 of the Act. However, Section 7 of the 
ESSO (Acquisition of Undertaking in India) Act

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