Dr Subramanian Swamy’s plea that Air India’s Disinvestment is arbitrary, illegal, corrupt: 5-pointer report of Del HC decision

Delhi High Court: The Division Bench of D.N. Patel, CJ and Jyoti Singh, J., dismisses Dr Subramanian Swamy’s plea stating that any delay in the process of disinvestment of Air India would cause loss to public exchequer, besides creating uncertainty amongst the existing employees.

Factual Matrix

The process of disinvestment of Air India and its subsidiaries commenced in June, 2017 with the in-principle approval of the Cabinet Committee on Economic Affairs. A policy decision to disinvest was taken after following the transparent procedure through multi-layered decision making, involving Inter-Ministerial Group, Core Group of Secretaries on Disinvestment and the empowered Air India Specific Alternative Mechanism at the apex Ministerial level, with support for the entire process from reputed Transaction Adviser, Legal Adviser and Asset Valuer.

Advertisements inviting bids mentioned that the Government would cease to be responsible for loss after the date of disinvestment.

Submissions of Dr Subramanian Swamy (Petitioner)

He submitted that the Air India Disinvestment process was arbitrary, unconstitutional, unfair, discriminatory and unreasonable and the same could not be sustained in law. The said process also violated Article 14 of the Constitution of India as well as against the interest of national integrity and security due to an ongoing investigation against Air Asia (India) Private Limited.

Further, it was urged that since there were only two financial bids, out of which one bidder was the Consortium led by Mr Ajay Singh, effectively the bidding process was a mere sham only to fulfil the technical requirement of there being more than one bidder. It was obvious that the whole process was collusive and tailor-made to facilitate Respondent 6 acquiring Air India.

Adding to the above submissions, the petitioner repeatedly stated that he was aggrieved by the methodology of valuation, which according to him was arbitrary, corrupt, illegal and against the public interest.

Hence, the petitioner sought a direction for quashing the Air India disinvestment process as also directing CBI to investigate the role and functioning of the official respondents, involved in the disinvestment process.

Mr Harish Salve, Senior Counsel on behalf of respondent 6 urged that the present petition was a challenge to a policy decision taken almost five years ago and was highly belated.

Decision

High Court found no reason to entertain the present Public Interest litigation for the following facts and reasons:

  • Neither Tata Sons Private Limited nor Respondent 6 are facing any criminal proceedings in relation to the subject matter of WP (C) 5909 of 2013 or in any other matter. Both Respondent 6, 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.
  • No charge sheet had been filed in any criminal proceedings against Air Asia (India) Private Limited or Talace Private Limited or Tata Sons Limited, as on date, in the matter pertaining to Air Asia and accordingly, no ground for disqualification of respondent 6 was made out.
  • Since SpiceJet Limited was not a member of the Consortium, 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. There was no material on record which would support the allegations of the petitioner that respondent 6 colluded with Mr Ajay Singh’s Consortium or was aware of the Consortium’s bidding strategy.
  • Methodology of Valuation: In the light of the excessive debt and other liabilities of Air India, arising out of huge accumulated losses, the bidding construct was revised in October, 2020, to allow the prospective bidders an opportunity to resize the balance sheet and increase chances of receiving bids and competition.

The apprehension of the Petitioner was based upon a news report in one of the newspapers that the Government sought Parliament’s nod to infuse over Rs 62,000 crores 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 (“DIPAM”) Secretary had stated that net liability on Government after Air India’s privatization amounted to Rs 28,844 crores.

Mr Harish Salve, Senior Counsel had clearly brought out the exact import of the said article. The article was self-explanatory and indicated 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 did not read in the manner sought to be read by the Petitioner. Thus, there was no substance in these allegations.

  • Lastly, the submission that Air India was a profitable enterprise until 2004 should not have been privatized, the same did not appeal to this Court and was not even germane to the issue in question.

The process of disinvestment of Air India was a policy decision by the Central Government, taken after due deliberations, at various levels and was not open to interference in judicial review by this Court, exercising jurisdiction under Article 226 of the Constitution of India.

High Court found merit in the submission of respondents 1 to 4 that each day, approximately Rs 20 crores are being invested to run the Airline by the Government. The successful bidder needs to invest huge capital to infuse new life into the concerned Airline.

Respondents 1 to 4 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.

Therefore, in view of the above discussion, the petition was dismissed. [Dr Subramanian Swamy v. Union of India, 2022 SCC OnLine Del 34, decided on 6-1-2022]


Advocates before the Court:

For the Petitioner:

Dr Subramanian Swamy, Petitioner-in- Person with Ms Ramni Taneja, Mr Satya Sabharwal and Mr Vishesh Kanodia, Advocates

For the Respondents:

Mr Tushar Mehta, Solicitor General with Mr Chetan Sharma, Additional Solicitor General, Mr Amit Mahajan, Central Government Standing Counsel, Mr Dhruv Pande, Ms Amita Gupta Katragadda, Ms Preksha Malik, Mr Kaustubh Rai and Ms Isha Chaudhary, for Respondents 1 to 4.

Mr Nikhil Goel, Special Public Prosecutor for Respondent 5.

Mr Harish Salve, Senior Advocate with Ms Anuradha Dutt, Mr Lynn Pereira, Ms Feresthe Sethna, Mr Haaris Fazili and Mr Kunal Dutt, Advocates for Respondent 6.

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