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Swamy’s plea against Air India disinvestment process ‘wholly devoid of merit’, says HC – Economic Times

The Delhi High Court Thursday dismissed a petition by BJP leader Subramanian Swamy for setting aside the Air India disinvestment process on the ground that the methodology adopted by the government was “arbitrary”, saying it was a policy decision and not open to interference in judicial review.

The court said Swamy’s petition was “wholly devoid of merit”.

The court said it saw no reason to entertain this Public Interest Litigation (PIL) while finding merit in the Centre’s stand that each day, approximately Rs 20 crore is being invested by the government to run the national carrier and that the successful bidder needs to invest huge capital to infuse new life into the airline.

“We also find merit in the stand of respondents no. 1 to 4 (Centre) 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,” a bench of Chief Justice D N Patel and Justice Jyoti Singh said, adding that the petition is wholly devoid of merits and is accordingly dismissed.

Swamy, a Rajya Sabha member, has sought setting aside and revoking any action or decision or grant of any further approvals, permissions or permits by authorities with respect to the Air India disinvestment process.

In October last year, the Centre accepted the highest bid made by Tata Sons company, Talace Pvt Ltd, for 100 per cent equity shares of Air India and Air India Express, along with the government’s 50 per cent stake in ground-handling company AISATS — the first privatisation in the country in 20 years.

The petition was opposed by the Centre, represented through Solicitor General Tushar Mehta, and Talace Pvt Ltd, represented through senior advocate Harish Salve.

Regarding Swamy’s argument that Air India which was a profitable enterprise until 2004 should not have been privatised, the bench said it does not appeal to this court and is not even germane to the issue in question.

“As brought out by the respondents, way back in June 2017, in-principle approval was accorded by the Cabinet Committee on Economic Affairs for the process of disinvestment of Air India and its subsidiaries.

“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, exercising jurisdiction under Article 226 of the Constitution, more particularly in the absence of any illegality or arbitrariness being established by the petitioner, in the decision making process and as rightly contended by respondent no.6 (Talace) is a highly belated challenge,” the bench said in its order.

The bench said it is an admitted case of Swamy that Talace Pvt Ltd is a wholly owned subsidiary of M/s Tata Sons Ltd and added that neither Tata Sons Ltd nor Talace Pvt Ltd is facing any criminal proceedings and both are Indian entities, therefore, no question of violation of Foreign Direct Investment Policy arises.

“Moreover, AirAsia (India) Pvt Ltd has no interest in M/s Talace Pvt Ltd, who is the highest bidder. No charge sheet has been filed in any criminal proceedings against AirAsia (India) Pvt Ltd or M/s Talace Pvt Ltd or Tata Sons Ltd, as on date, in the matter pertaining to AirAsia and accordingly, no ground for disqualification of respondent no.6, as per the criteria set out in the Preliminary Information Memorandum (PIM), is made out,” it said.

Regarding another ground raised in the petition that the bidding process was tailor made to facilitate Talace Pvt Ltd acquiring Air India by entertaining a bid on behalf of SpiceJet, the court said it was “equally devoid of merit” as the disinvestment process saw keen competition.

“There is no material on record which would support the allegations of the petitioner that respondent no.6 colluded with Ajay Singh’s Consortium or was aware of the Consortium’s bidding strategy,” it said.

The government signed the share purchase agreement with Tata Sons on October 25, 2021 for the sale of Air India for Rs 18,000 crore. The Tatas would pay Rs 2,700 crore in cash and take over Rs 13,500 crore of the airline’s debt.

The Tatas beat the Rs 15,100 crore offer from a consortium led by SpiceJet promoter Ajay Singh and the reserve price of Rs 12,906 crore set by the government for the sale of its 100 per cent stake in the loss-making carrier.

As of August 31, 2021, Air India’s total debt was Rs 61,562 crore, of which 75 per cent or Rs 46,262 crore will be transferred to a special purpose vehicle, Air India Assets Holding Limited (AIAHL), before handing over the airline to the Tata group.

Swamy had earlier submitted that a consortium led by SpiceJet was the other bidder but as insolvency proceedings were going on against the airline in the Madras High Court, it was not entitled to bid and therefore there was effectively only one bidder.

The solicitor general had contended that the petition was founded on three misconceptions and does not need any consideration.

Salve had also contended that there was nothing in the petition and that the bids were complete, the share agreements signed and all this has been in public domain for quite some time.