PIL filed against government, LIC for holding stake in ITC

Mumbai: Tata managing trustee R. Venkataramanan, a project manager at Tata Trusts and doctors from Tata Memorial Hospital have filed a public interest litigation (PIL) in the Bombay high court against the government and state-run insurers, including Life Insurance Corporation of India (LIC), for holding shares in cigarette maker ITC Ltd.

The petition, which also names the insurance regulator, argues that it doesn’t make sense for the government, which is tackling health issues arising out of tobacco consumption, to directly or indirectly hold a stake in ITC or, for that matter, other companies in the tobacco business. A copy of the petition has been reviewed by Mint.

“The respondents (insurance companies and government) should cease and desist from making any further investments in any commercial enterprise that is linked with funding, promoting, selling, directly or indirectly controlling or operating a tobacco business,” said the petition filed on Thursday.

The court will decide whether to admit the petition or not.

Corporate lawyer H.P. Ranina said the argument put forth by the petitioners may not have merit. “The insurance companies are merely acting as investors and are not promoting the use of tobacco or even the company in any way. The insurance companies are just trying to get the best return on their investments.”

The petition has been filed by seven petitioners in their individual capacity. The petitioners include: Venkataramanan, who oversees various public health initiatives undertaken by Tata Trusts; Sumitra Pednekar, whose husband Satish Pednekar, a former home and labour minister in Maharashtra, died of throat cancer; Dr. Pankaj Chaturvedi, head and neck cancer specialist at Tata Memorial Hospital; Dr. Abhay Bang; Ashish Deshmukh, member of legislative assembly in Maharashtra; Dr. Prakash Gupta and Lakshman Sethuraman, who heads cancer infrastructure projects at Tata Trusts.

The government of India, through five state-run insurance companies and Specified Undertaking of Unit Trust of India, owns a 32% stake in ITC.

The government’s holding in the company is worth Rs1.07 trillion, of which Rs76,505 crore is held by the state-run insurers.

“It is apparent that the public sector companies are acting to enable the use of public funds to benefit an industry creating a public hazard,” said the petition, calling ITC primarily a ‘tobacco’ company.

“Such actions violate the statutes which protect the public from the hazard of tobacco products,” it added.

It said the government is in violation of Article 21 of the Constitution of India. The actions of the government are benefiting an industry ‘substantially prejudicing’ the right to life of the entire citizenry, it argued. The petition has also cited the LIC Act and Insurance Regulatory and Development Authority Act which mandate that insurance companies act in the interest of policy holders. “It has been conclusively established that tobacco causes cancer and other diseases, increasing the chances of premature death,” said the petition.

“Tobacco is responsible for nearly 50% cancers in India and 90% of mouth cancer patients die within 12 months of diagnosis,” the petitioners said.

ITC declined to comment. State-owned insurers didn’t respond to emails seeking comment.