New Delhi: The Delhi high court on Thursday dismissed Bharatiya Janata Party (BJP) Rajya Sabha member Subramanian Swamy’s plea seeking to set aside the Air India disinvestment process, saying that the valuation of the national carrier saw keen competition and was not tailor made or rigged in favour of the Tatas.
The court said the plea is “wholly devoid of merit” as the policy decision to disinvest the national carrier was taken after “following transparent procedure through multi-layered decision making”.
In October last year, the Centre accepted the highest bid made by a Tata Sons company for 100% equity shares of Air India and Air India Express, along with the government’s 50% stake in ground-handling company AISATS.
Claiming that the process was “arbitrary, illegal and against public interest”, Swammy had sought a probe by the Central Bureau of Investigation (CBI) in the Air India disinvestment process.
Swamy had alleged that the entire bidding process was rigged and one of the parties, Tatas, was given undue advantage, a claim vehemently refused both by the Centre and the corporate giant.
In his plea filed through advocate Satya Sabharwal, the senior BJP leader submitted that a consortium led by SpiceJet was the other bidder but insolvency proceedings are going on against the airline in the Madras high court. Hence, SpiceJet was not entitled to bid and therefore, effectively there was only one bidder, he alleged.
{{/usCountry}}In his plea filed through advocate Satya Sabharwal, the senior BJP leader submitted that a consortium led by SpiceJet was the other bidder but insolvency proceedings are going on against the airline in the Madras high court. Hence, SpiceJet was not entitled to bid and therefore, effectively there was only one bidder, he alleged.
{{/usCountry}}On Thursday, rejecting the Swamy’s argument, a bench of chief justice DN Patel and justice Jyoti Singh said that Spicejet Limited was neither a member of the consortium nor an “affiliate” on whose net worth, any of the members of the consortium had relied on, to meet the financial capability criteria of the bidding process.
“One of the bidders who submitted the financial bid was a consortium in which the lead member was Ajay Singh, but, in his individual capacity,” the court noted.
The court also said that the process of bidding was not tilted towards the Tatas as seven expressions of interest (EOI) were received in December 2020 and two bidders submitted the financial bid in September, 2021.
Swamy had also contended that an investigation is ongoing against AirAsia Ltd for breach of Foreign Direct Investment and it has direct and indirect control over Talace Private Limited, a Tata Sons subsidiary that won the bid for acquiring Air India.
However, the court dismissed the claim and said that Talace Private Limited is a wholly owned subsidiary of Tatas and neither of them have any criminal proceedings in connection to AirAsia’s FDI breach.
“Both Respondent No 6 (Talace Pvt Ltd) as well as Tata Sons Limited are Indian entities and therefore, no question arises of violation of Foreign Direct Investment Policy, in any event. Moreover, AirAsia (India) Private Limited has no interest in M/s Talace Private Limited, who is the highest bidder,” the court said.
It added that no charge sheet has been filed in any criminal proceedings against AirAsia (India) Private Limited or M/s Talace Private Limited or Tata Sons Limited, as on date, in the matter pertaining to AirAsia and accordingly there is no ground for its disqualification.
“In fact, in our view, the said petition is wholly irrelevant and unconnected to the present controversy,” the court added.
The court said Swamy’s contention that Air India, which was a profitable enterprise until 2004, should not have been privatised neither appeals it nor is even germane to the issue of corruption as the disinvestment process was given in principle approval in 2017. The court said the challenge to the process was “highly belated” as argued by the Tatas.
“This was a policy decision by the central government, taken after due deliberations, at various levels and is not open to interference in judicial review by this court… more particularly in the absence of any illegality or arbitrariness being established by the petitioner, in the decision making process..,” the court said.
It accepted the submission of Solicitor General (SG) Tushar Mehta, who had argued that Air India was incurring losses to the tune of ₹20 crore on a daily basis.
“We also find merit in the stand of respondents that they have been working towards closing of the disinvestment process, at the earliest and any further delay shall cause loss to the public exchequer, besides creating uncertainty amongst the existing employees, with regard to their future prospects and it needs no gainsaying that public interest shall be adversely affected,” the court said.
The bench said that the apprehension of rigging and corruption in the disinvestment process was based on a news report that the Union government has sought Parliament’s nod to infuse over ₹62,000 crore to its company that holds Air India’s debt, liabilities and some non-core assets, whereas in October, 2021, department of investment and public asset management secretary had stated that net liability on government after Air India’s privatisation amounted to ₹28,844 crore.
The court said the article is self-explanatory and indicates the balance amounts due, including interest liabilities towards working capital and aircraft loans, lease rentals, owing to the oil companies and to the Airports Authority of India and does not read in the manner sought to be read by Swamy.
The government signed the share purchase agreement with Tata Sons on October 25 last year for the sale of Air India for ₹18,000 crore. The Tatas would pay ₹2,700 crore in cash and take over ₹13,500 crore of the airline’s debt.
The Tatas beat the ₹15,100-crore offer from a consortium led by SpiceJet promoter Ajay Singh and the reserve price of ₹12,906 crore set by the government for the sale of its 100% stake in the loss-making carrier.