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‘Wholly devoid of merit’: Why Delhi HC dismissed Subramanian Swamy’s challenge to Air India sale

Alleging corruption and a threat to ‘national security’, the BJP MP had filed a petition against sale of Air India to the winning bidder, a wholly owned subsidiary of Tata Sons.

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New Delhi: The Delhi High Court Thursday dismissed a writ petition filed by Bharatiya Janata Party (BJP) MP Subramanian Swamy, challenging the disinvestment in national carrier Air India. The court described the petition as “wholly devoid of merit”.

The Union government in 2020 had invited bidders for a 100 per cent equity shareholding in Air India, along with the carrier’s shareholdings in Air India Express Limited (AIXL) and Air India Transport Services Limited (AISATS). 

After almost 20 months of the bidding process, Talace India Private Limited, a wholly owned subsidiary of Tata Sons, won the bid in October 2021 for an enterprise value (EV) of Rs 18,000 crore.

Swamy approached the Delhi High Court to block the sale and order an investigation in the matter, alleging fraud and corruption and terming the sale a threat to “national security and integrity”.

A bench of Chief Justice D.N. Patel and Justice Jyoti Singh dismissed the petition filed by the BJP leader in a detailed order passed Thursday. Swamy tweeted that he would decide on appealing to the Supreme Court after going through the High Court order.

 


Also read: BPCL sale unlikely this fiscal, Modi govt will be Rs 60,000 cr short of disinvestment target


‘Fraudulent, deceptive, corrupt and opaque’: Swamy

Swamy had approached the Delhi High Court with an urgent application, alleging violations of fundamental rights. He submitted that ownership being vested in Indian nationals was mandatory according to the eligibility criteria for the sale of Air India, and that Talace India didn’t meet this requirement. 

He referred to his pending plea against the carrier AirAsia (partially owned by Tata Sons) for alleged violation of the 2012 norms of the Foreign Investment Promotion Board (FIPB). In his earlier petition, he had alleged that “effective control” of Air Asia was vested with a foreign entity (AirAsia Group, and particularly AirAsia Berhad).

Such “effective control” being vested with foreign nationals meant that the venture was in violation of the then norms of the FIPB and foreign direct investment. Swamy said that this meant the joint venture AirAsia was against ‘national integrity and security’.

As a corollary to the proceedings against AirAsia, it was his case that because Air India is being sold to Tata Sons, the present disinvestment process is also against “national integrity and security”.

Swamy also alleged that the disinvestment process was tailor-made for the flagship carrier to be acquired by Tata Sons. The second bidder in the Air India disinvestment process was a consortium led by Ajay Singh, owner and promoter of the airline SpiceJet. 

However, Swamy argued that as SpiceJet was undergoing winding-up proceedings before the Madras High Court, it was ineligible to participate in the process — which meant there was effectively only one bidder, Talace India.

Petitioning for the process to be quashed, he had averred that it was “fraudulent, deceptive and corrupt”, and asked for a CBI-monitored probe into the “opaque” sale.

‘Baseless, not an iota of evidence’

Solicitor General Tushar Mehta contended that Talace was “wholly owned by Tata Sons”, and that the proceedings against AirAsia had no bearing on the matter, terming the allegations by Swamy “absolutely baseless”. 

Mehta additionally submitted that SpiceJet was never a part of the Air India bids, and the only qualifying bid was from Ajay Singh in his individual capacity.

Senior Counsel Harish Salve, representing Tata Sons, submitted that the petitioner had not produced an “iota of evidence or material in the present petition” that would “remotely” suggest possible collusion between the bidders. 

“There is nothing in this petition. No particulars are given. They can just repeat that there is corruption but no details are given,” said Salve.


Also read: Only 8 PSUs’ disinvestment is complete out of 36 selected in 2016, govt tells Lok Sabha


No ground for disqualification, AirAsia issue ‘irrelevant’: HC

The court rejected all contentions raised by Swamy and dismissed the appeal. It noted that there was no ground for the disqualification of Talace India from the disinvestment process, since neither Tata Sons nor Talace India had any criminal proceedings pending against them.

The bench dismissed Swamy’s submissions regarding AirAsia as having no bearing on the present matter, saying, “In fact, in our view, the said petition is wholly irrelevant and unconnected to the present controversy.”

The bench also ruled out Swamy’s allegations concerning SpiceJet, holding that SpiceJet was never a part of the bidding consortium for Air India and that Ajay Singh participated in an individual capacity.

“SpiceJet Limited was not a member of the consortium and thus any proceedings pending against SpiceJet Limited will be of no consequence and would not result in disqualification of the consortium, having Mr. Ajay Singh as the lead member,” the bench said.

The court also approved of the ‘methodology of valuation’ for the sale, saying that it followed established practices, with support from reputed transaction and legal advisors as well as asset valuers.

Lastly, the bench dismissed the petitioner’s case that Air India should not have been privatised as it was a “profitable enterprise” until 2004. The bench noted that a policy decision by the government is not open to judicial review unless it is arbitrary or illegal, which was not the case here.

Akshat Jain, a first-year student of law at NLU, Delhi, is an intern with ThePrint

(Edited by Rohan Manoj)


Also read: From challenge to a challenger – Why Air India’s new journey has a lot flying on it


 

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