The Tyre Corporation of India Limited (Disinvestment of Ownership) Act, 2007

Summary of the Tyre Corporation of India Limited (Disinvestment of Ownership) Act, 2007
Key Provisions
1. Objective: - Facilitate the disinvestment of the Government's equity in Tyre Corporation of India Limited.
• Attract private sector investment for the sustainable production of tyres, tubes, and rubber goods, crucial for the national economy.
2. Disinvestment Mechanism (Section 2):
• Empowers the Central Government to transfer shares to any entity via an order, based on recommendations from the Board for Reconstruction of Public Sector Enterprises.
3. Payment Terms (Section 3):
• The transferee must provide consideration to the Central Government, determined by the optimal valuation of the company's assets, liabilities, and land.
• Flexible payment methods to be mutually agreed upon.
4. Disinvestment Methods (Section 4):
• Public Offer
• Preferential Allotment
• Private Placement
• Directing the company for a further equity issue.
5. Provisions for Employees (Section 5):
• Continuity: All employees (except Chairman and Directors) retain their positions on the same terms for 3 years post-disinvestment.
• Opt-Out Clause: Employees opting out are deemed resigned.
6. Supremacy Clause (Section 6):
• This Act overrides any conflicting provisions in the Inchek Tyres Limited and National Rubber Manufacturers Limited (Nationalisation) Act, 1984, or other laws.

Legislative History:

The Tyre Corporation of India Limited (Disinvestment of Ownership) Act, 2007

Short Title The Tyre Corporation of India Limited (Disinvestment of Ownership) Act, 2007

Act Number / Year Act No. 50 of 2007

Act ID (India Code) 200750

Presidential Assent Date December 12, 2007

Enforcement Date December 12, 2007

Nodal Ministry Ministry of Heavy Industries and Public Enterprises

Precedent & Statutory Rationale

1. Background of Public Ownership:

o In the 1980s, the undertakings of Inchek Tyres Limited and National Rubber Manufacturers Limited were nationalized under the Inchek Tyres Limited and National Rubber Manufacturers Limited (Nationalisation) Act, 1984 and vested into a newly formed public sector undertaking, Tyre Corporation of India Limited (TCIL), headquartered in Kolkata.

2. Legal Mandate for Parliamentary Disinvestment Approval:

o Following judicial interpretations (such as the Supreme Court ruling in Centre for Public Interest Litigation v. Union of India, 2003), any alteration of the public character of a statutory government company requires explicit parliamentary sanction.

o To facilitate strategic disinvestment, reduce fiscal burdens from continuous industrial sick-units, and invite private sector investment to revive manufacturing operations, a specific parliamentary enactment became legally necessary.

Parliamentary Trajectory & Enactment

• Formulation: Prepared and piloted by the Ministry of Heavy Industries and Public Enterprises to enable equity divestment in TCIL.

• Parliamentary Passage: Tabled, debated, and passed by both Houses of Parliament during the winter session of 2007.

• Presidential Assent: Received formal Presidential Assent on December 12, 2007, entering the statute book as Act No. 50 of 2007.

• Enforcement: Enforced on December 2007.

• Source: India Code and Ministry of Heavy Industries and Public Enterprises Official Records