Cabinet approves Laying down procedure and mechanism for sale of enemy shares

The Union Cabinet chaired by Prime Minister Shri Narendra Modi has approved the mechanism and procedure for sale of the enemy shares. Details are as follows: ‘In principle’ approval has been accorded for sale of enemy shares under the Custody of Ministry of Home Affairs/ Custodian of Enemy Property of India (CEPI), as per sub-section 1 of section 8A of the Enemy Property Act, 1968. Department of Investment and Public Asset Management has been authorized under the provisions of sub-section 7 of section 8A of the Enemy Property Act, 1968, to sell the same. Sale proceeds are to be deposited as disinvestment proceeds in the Government Account maintained by Ministry of Finance. Details: A total number of 6,50,75,877 shares in 996 companies of 20,323 shareholders are under the custody of CEPI. Of these 996 companies, 588 are functional/ active companies, 139 of these are listed with remaining being unlisted. The process for selling these shares is to be approved by the Alternative Mechanism (AM) under the Chairmanship of Finance Minister and comprising Minister of Road Transport and Highway and Home Minister. The AM will be supported by a High Level Committee (HLC) of officers co-chaired by the Secretary, DIPAM and Secretary, MHA (with representatives from DEA, DLA, M/o Corporate Affairs and CEPI) that would give its recommendations with regard to quantum, price/price-band, principles/ mechanisms for sale of shares, etc. Before initiation of sale of any Enemy Shares, the CEPI shall certify that the sale of the Enemy Shares is not in contravention of any judgment, decree or order of any court, tribunal or other authority or any law for the time being in force and can be disposed off by the Government. The advisors/ intermediaries like Merchant Bankers, Legal Adviser, Selling Brokers etc. as may be required for the disposal of movable enemy property, will be appointed by DIPAM through an open tender/limited tender process. An Inter-Ministerial Group (IMG) will guide the process of sale. In the Act of 1968, the definition of “enemy” was as follows: “enemy” or “enemy subject” or “enemy firm” means a person or country who or which was an enemy, an enemy subject or an enemy firm, as the case may be, under the Defence of India Act and Rules, but does not include a citizen of India. In the amendment of 2017, this was substituted by “…. including his legal heir or successor, whether or not citizen of India or the citizen of a country which is not an enemy or the enemy….. who has changed his nationality”. Impact: The decision will lead to monetization of enemy shares that had been lying dormant for decades since coming into force and the Enemy Property Act in 1968. With the amendment of 2017, an enabling legislative provision was created for the disposal of enemy property. With the approval, now, of the procedure and mechanism for sale of enemy shares an enabling framework has been institutionalized for their sale. Major Impact: The decision will lead to monetization of movable enemy property lying dormant for decades. Sale proceeds from this may be used for development and social welfare programmes. Background: The Enemy Property Act, 1968 provides for continued vesting of enemy property vested in the CEPI under the Defence of India Rules, 1962 and the Defence of India Rules, 1971, (w.e.f. 27.09.1997). In 2017, through an amendment to this Act, vide Section 8A, the CEPI has been empowered for sale of enemy property. Further, “ Notwithstanding anything contained in any judgment, decree or order of any court, tribunal or other authority or any law for the time being in force, the Custodian may, within such time as may be specified by the Central Government in this behalf, dispose of whether by sale or otherwise, as the case may be, with prior approval of the Central Government, by general or special order, enemy properties vested in him immediately before the date of commencement of the Enemy Property (Amendment and Validation) Act, 2017 in accordance with the provisions of this Act, as amended by the Enemy Property (Amendment and Validation) Act, 2017”. According to amendment, as in sub-section 7 of section 8A of the Enemy Property Act, 1968, Central Government may direct that disposal of enemy property shall be made by any other authority or Ministry or Department instead of Custodian.