Ahmedabad: A full bench of Gujarat high court on Wednesday ruled that the Vadodara-based Gujarat State Fertilizers and Chemicals Ltd (GSFC) and Bharuch-based Gujarat Narmada Valley Fertilizers Company Ltd (GNFC) were not government companies.
“With this ruling, Gujarat government will have no direct say to rope in GSFC and GNFC and other state-supported companies for compulsory corporate social responsibility or implement labour laws,” a senior government official to the web.
The official added that any government-related decision for these companies will have to be approved at the annual general body meeting. “We loosely call these companies as public sector undertakings (PSUs), but as their government share is less than 51 per cent, they are at best statesupported joint sector companies,” the official said. In 1995, a division bench of Gujarat HC had held that the two fertilizer companies should not be considered as ‘state’ or state undertakings as per Article 12 of the Constitution. The high court concluded this when hearing a petition on the basis of a state government document and divestments made by the government.
However, on March 14, 2008, the state government had issued a government resolution, making it mandatory for GSFC, GNFC and such companies to have all their administrative, financial and corporate decisions pre-approved by the government. On November 4, 2008, the state finance department sent a letter to GSFC, GNFC and a couple of other companies reiterating the decision.
The letter said, “Since the state government has invested substantial public fund in these companies, either directly or through other companies/boards/corporations controlled by the government, and since government provides the services of very senior administrative officers to these companies on deputation, it is expected that these companies should manage their affairs keeping in mind the broad objectives of the government”.
These developments brought the issue back to the high court. During the hearing, the government filed an affidavit saying that it had no control over these companies after which the bench confirmed that GSFC and GNFC cannot be considered as state’s companies.
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