Tata Trusts trustees R Venkataramanan and Laxman Sethuraman along with five others have filed a public interest litigation (PIL) in the Bombay High Court against the union government, the Insurance Regulatory and Development Authority of India and five state-run life insurance companies for investing in tobacco companies including ITCBSE -0.73 % and VST IndustriesBSE 3.45 %. Such investments contradict the anti-tobacco stance of the government of India on a national and international level, the PIL said.
The holdings are worth a total Rs 1.03 lakh crore based on Thursday’s closing prices.
Four public sector insurance companies and the Specified Undertaking of the Unit Trust Of India (SUUTI) hold a 30.25% stake in ITC. While Life Insurance Corp of India has a 16.29% stake, SUUTI’s holding is 9.10%. On February 7, the government sold 2% of its stake in ITC held through SUUTI to LIC for Rs 6,700 crore.
Other companies named in the PIL include General Insurance Co, New India Assurance Co, Oriental Insurance Co and National Insurance Co. New India Assurance holds a 1.71% stake in VST Industries.
LIC, which has sold millions of Indians life cover, should not be party to the business of ITC or any other tobacco firm, said the PIL. The petitioners include Sumitra Hooda Pednekar, widow of former Maharashtra minister Satish Pednekar, who died of throat cancer; Pankaj Chaturvedi, surgeon, Tata Memorial Hospital; Abhay Bang, director of the Society for Education, Action and Research in Community Health; Ashish Deshmukh, member of the Maharashtra Legislative Assembly and chairman of the No Tobacco Association NGO; and PC Gupta, director of the Healis-Sekhsaria Institute of Public Health.
Venkataramanan is the managing trustee of Tata Trusts and he oversees various public health initiatives undertaken by them.
The PIL was filed by advocates Zulfiqar Memon, son of criminal lawyer Majeed Memon, and Avishkar Manu Singhvi, son of senior Congress leader Abhishek Manu Singhvi, on behalf of the seven individuals. Bang and Chaturvedi confirmed they were part of the PIL but declined to comment on specifics. Venkataramanan, Sethuraman, Pednekar, Deshmukh and Gupta did not respond to queries.
The PIL called on the high court to direct the public sector insurance companies to divest their shareholding from the companies that are directly and indirectly engaged in the tobacco businesses.
“While on one hand, the government is committed to tackling the problem of tobacco and the ill-effects caused by it, the insurance companies, in complete disregard to the government’s policy, continue to invest in ITC,” the PIL said. This is against the spirit and intent of the World Health Organization’s Framework Convention on Tobacco Control, it said.
ITC is India’s largest company by market value in the fast-moving consumer goods (FMCG) sector and has been one of the top wealth-creating companies. However, the FMCG segment of ITC has not yielded much revenue for the company and it continues to thrive on tobacco. Nearly 48% of its revenue and 85% of its profit comes from the cigarette business. ITC couldn’t be immediately reached for comment.
PIL SEEKS GUIDELINES
The PIL also asked the court to order the public sector institutions to cease making further investments in any commercial enterprise that is linked with funding, promoting, selling, directly or indirectly controlling or operating a tobacco business. It also asked that the government and the Insurance Regulatory and Development Authority of India be directed to frame guidelines or a code of conduct to ensure that the shares are divested and such investments don’t take place in the future.
Despite several representations made by the petitioners and others, the insurance companies have not taken any steps that indicate their readiness to divest their holdings in the tobacco companies, the PIL said.
