Finance ministry, SEBI to be made parties in plea against LIC stake in ITC: court2 min read . Updated: 27 Apr 2017, 10:23 PM IST
Bombay High Court orders finance ministry and others to be made parties to a plea against LIC's investments in ITC, which 'earns 80% of its revenue from sale of tobacco'
Mumbai: The Bombay High Court on Thursday ordered Union finance ministry and others to be made parties to a plea against Life Insurance Corporation (LIC)’s investments in business conglomerate ITC Ltd, which “earns 80% of its revenue from sale of tobacco."
A bench of chief justice Manjula Chellur and justice G.S. Kulkarni asked the petitioners, the Tata Memorial Hospital doctors, to make ministry of commerce and industry, SEBI and ITC too parties to their plea against the LIC’s stake in ITC Ltd.
The plea by the doctors and the widow of a former state minister objected to the state enterprise LIC holding one- third equity in the ITC which allegedly derives 80% of its revenue from the sale of cigarettes. “All those persons who may be affected by the petition will have to be impleaded and their side will have to be heard," the court said posting the petition for further hearing after eight weeks.
The doctors have moved the court pointing out the inherent contradiction between the government’s policy to discourage tobacco consumption and the act of making investments in a tobacco major. “On one hand, the Union and the state government are making efforts and promoting anti-tobacco warnings and programmes but on the other hand, the LIC is investing in a company which derives majority of its revenue from the sale of cigarettes. This is contrary to the government’s efforts to eradicate use of tobacco," argued the petitioners’ counsel Venkatesh Dhond.
The court, however, sought to know if the Union government has any policy on the issue. “We do not think the Union government deals with these issues," the court said. The petition argued that the state-owned insurance firm and the government should desist from making any further investments in any commercial enterprise which is involved in funding, promoting, selling, controlling and operating, directly or indirectly, a tobacco business.
The petition has been filed by seven persons, which includes the doctors of Tata Memorial Hospital and the members of the Tata Trusts. Yet another key petitioner included Sumitra Pednekar, whose husband Satish Pednekar, the former home and labour minister of Maharashtra, died of throat cancer in 2011.
The petition said the Union government owns a 32% stake in ITC through five state-run insurance companies, and the Unit Trust of India. When the court sought to know today as to why the petition has been filed now despite the LIC investing in ITC since 1972, Dhond said the issue came to their knowledge in October last when the LIC increased the equity share by two per cent.