ITC, Sebi made party in PIL against investing in tobacco companies

The Bombay High Court (HC) on Thursday impleaded cigarette major ITC, market regulator Securities and Exchange Board of India (Sebi) in the public interest litigation (PIL) against investment in tobacco companies by the government and state-owned insurance companies. The court also granted farmers' association request to be part of the PIL.

The court directed the new respondents to file their respective affidavits in reply to the petition within six weeks. The next hearing in the matter is likely within eight weeks.

Additional Solicitor General of Bombay will represent the Indian government in the matter.

The PIL has been filed by Sumitra Hooda Mahajan, wife of the late Satish Pednekar, former minister of Maharashtra who died of oral cancer, and six other citizens including Tata Memorial Hospital's doctor Pankaj Chaturvedi and Tata Trusts managing trustee R Venkataramanan, in his personal capacity, against the government and six other state-owned insures. The petition seeks divestment of the insurance companies’ holding in tobacco companies and also prevent them from such investments in the future.

Life Insurance Corporation (LIC), The New India Assurance, General Insurance Company of India, The Oriental Insurance Company and National Insurance Company are the state-owned insurance companies named as respondents in the PIL. Insurance sector regulator Insurance Regulatory and Development Authority (Irda) has also been named as a respondent.

The insurance companies, along with the Specified Undertaking of Unit Trust of India (Suuti), hold 32 per cent stake in lTC, which gets most of its revenues from the sale of cigarettes. The stake is valued at more than Rs 1 lakh crore.

The lawyers representing the petitioners argued that the government is consciously trying to address the menace of tobacco usage on one hand, institutions and companies owned by it are investing in tobacco companies on the other hand.

Counsels representing the respondents argued against the PIL stating that the investments made in companies were in the secondary market and not in any direct investment in the operations of the company.

Counsels representing the famers associations said in various states farmers are dependent on tobacco for their livelihood.

The Bombay High Court was of the view that all parties affected by the petition would have to be heard.