HC refuses to interfere with BoB's decision inviting EoI for NBL stake sale

The Delhi High Court has refused to interfere with the "expression of interest (EoI)" invited by Bank of Baroda (BoB) for acquisition of its stake in Nainital Bank Limited (NBL).

Justice Purushaindra Kumar Kaurav dismissed a petition by the Nainital Bank Officers Association and said BoB's divestment decision was not arbitrary or illegal, and there was no "clear violation" of any statutory provisions in the process.

The judge, in an order passed on May 2, said divestment is a policy decision involving complex economic factors, and courts have consistently refrained from interfering with economic decisions.

"This court, therefore, at this stage, is not inclined to interfere with the impugned advertisement of EoI. However, it would be open to the petitioner to raise any grievance at an appropriate stage in accordance with the law, if so necessitated," the court ordered.

"It is thus seen that in the instant case, in the absence of there being a clear violation of any statutory provision, no interference is called for. More so, the decision of the BoB for divestment cannot be said to be arbitrary or illegal so as to warrant interference of this court under its power of judicial review," the court said.

The petitioner contended before the court that the decision of inviting EoI on December 14 last year is "arbitrary and illegal" as well as in violation of the recommendations made by a parliamentary committee as well as the Ministry of Finance.

The petitioner, represented by lawyer Prashant Bhushan, alleged some of the officials of Bank of Baroda, with the connivance of some private players, are trying to dilute the stake of the BoB in the NBL.

The court noted invitation of EoI is the second step after taking the principal decision to go ahead for divestment, and it was "unambiguously clear" that no approval is required from RBI for publishing 'Preliminary Information Memorandum' inviting EoI.

In its order, the court concluded no final and binding decision was taken by any of the authorities to merge NBL with BoB, and it was left to the discretion of BoB either to merge the NBL with itself or to go for divestment.

"It is clear that a process of divestment is a policy decision involving complex economic factors. The courts have consistently refrained from interfering with economic decisions as it has been recognized that economic expediencies lack adjudicative disposition and unless the economic decision, based on economic expediencies, is demonstrated to be so violative of constitutional or legal limits on power or so abhorrent to reason, the courts would decline to interfere," it said.

Solicitor General Tushar Mehta, appearing of BoB, contended the petition was "misconceived, presumptuous and premature" and there was no reason to presume that in the process of divestment, the applicable law would not be followed.

He said there were communications from the Reserve Bank advising BoB to either merge the NBL with itself or to divest its share, and if BoB, on the basis of the attendant circumstances, has taken a policy decision to go for divestment, the same cannot be interfered with.