Mumbai: The Bombay high court on Thursday made the ministries of finance, agriculture and industry and the markets regulator party to a public interest litigation (PIL) against the government and state-run insurers including Life Insurance Corp. of India (LIC) for holding shares in cigarette maker ITC Ltd.
The court directed the insurance companies, insurance regulator, and the other parties to file their responses within six weeks. The court will hear the matter when it reopens after vacation.
The petition has been filed by Tata Trustee R. Venkataramanan; Sumitra Pednekar— whose husband Satish Pednekar, a former home and labour minister in Maharashtra, died of throat cancer; Pankaj Chaturvedi, head and neck cancer specialist at Tata Memorial Hospital; Abhay Bang; Ashish Deshmukh, member of legislative assembly in Maharashtra; Prakash Gupta and Lakshman Sethuraman, who heads cancer infrastructure projects at Tata Trusts.
The petition 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 stake in ITC or, for that matter, other firms in the tobacco business.
The petitioners, who are being represented by MZM Legal, argued in the court that the PIL was filed in order to seek clarity on the state policy on tobacco. “Especially because the Government of India which is almost like a co-owner in a tobacco company like ITC is also a signatory to the World Health Organization (WHO) convention which discourages investment of state in tobacco companies,” said Venkatesh Dhond, senior counsel.
The government of India, through five state-run insurance firms and Specified Undertaking of Unit Trust of India, owns a 32% stake in ITC. The government’s holding in the firm is worth Rs1.07 trillion, of which Rs76,505 crore is held by the state-run insurers.
In addition, a shareholder of ITC and two tobacco associations have also been made a party to the case.
ITC shareholders represented by Janak Dwarkadas have argued that state insurers being forced to divest their stake in ITC will affect the share price of the company adversely.
Two tobacco associations have submitted that such divestment would impact the livelihood of tobacco farmers.