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The Delhi High Court has recently dismissed a plea filed by BJP leader Subramanian Swamy's challenge to debt-submerged Airline Air India's disinvestment process, stating that the policy decision to disinvest was taken after following transparent procedure through multi-layered decision making, involving Inter-Ministerial Group (IMG), Core Group of Secretaries on Disinvestment (CGD) and the empowered Air India Specific Alternative Mechanism (AISAM) at the apex Ministerial level.

A bench of Chief Justice DN Patel and Justice Jyoti Singh while dismissing the plea against the disinvestment stated that, "Rs. 20 crores are being invested to run the Airline by the Government"

The Court in its order noted that,

"The apprehension of the Petitioner is based upon a news report in one of the newspapers that the Government has 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."

In relation to this Senior Advocate, Harish Salve appearing for the respondents submitted has that, "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 the Petitioner. Thus, there is no substance in these allegations."

The bench has further noted that the respondents have been working towards the 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.

Earlier, the Government of India had argued that the process was part of a policy decision, beyond the scope of judicial review, whereas Dr. Swamy appearing in person, had alleged that “The bidding and disinvestment process was illegal, corrupt, mala fide, and rigged in favour of Respondent No. 6 (Talace, a fully owned subsidiary of Tata Sons Pvt Ltd) which is a subsidiary of the Tatas."

He had stated that "the bidding process was collusive and favoring a particular party (Tatas)."

Questioning the process he had informed the Bench that one of the parties participating in the bidding process, SpiceJet, was itself undergoing insolvency proceedings at the time of bidding, with Madras High Court having issued orders for winding up of SpiceJet.

Therefore, he said Spicejet "was not eligible to take part in the bidding process", at all. 

"This means there was only 1 bidder - this is one aspect to be looked into," Swamy pointed out.

On the contrary, Solicitor General of India (SGI) for the Government of India stated that there were 3 facts to the matter, which, if clarified, may ensure that the petition does not survive at all.

He pressed that Talace, a wholly-owned subsidiary of Tata, has nothing to do with Air Asia and that neither Talace nor Tata Sons Pvt Ltd have any criminal proceedings pending against them, therefore criminal proceedings pending against Air Asia have no bearing on the present deal.

The SGI further said that Talace and Tata Sons "have nothing to do with Air Asia." 

He contended that “Air Asia facing something - 2013, '14, '15 something is pending, is wholly irrelevant for our purposes. SpiceJet facing some proceedings etc is also completely irrelevant because Spicejet was not part of the Consortium.”

Subsequently, Sr. Adv. Harish Salve appearing for Talace argued that "The government was very clear that the entity buying has to be 100% Indian, so the successful bidder (Talace) is a 100% Indian company owned by a 100% Indian company (Tata Sons Pvt Ltd)."

"Government has managed to sell Air India. The employees are already tense about when they're going to get paid. One can go on repeating ad nauseum, this is corrupt, it is mala fide, but there are no particulars. Air India was making huge losses," he added.

Swamy however said that "The issue is not just of loss - just because a PSU is making losses doesn't mean it has to be sold. It's also about management. Profitable routes have been handed over to Emirates, etc - so there are many reasons for the loss. It's not about loss, it's about the procedure."

Swamy also pointed out Tatas' involvement in Air Asia, in dubious transactions in Dubai, and said that he is "not against the policy of disinvestment."

He said, "I've always been a supporter of free markets and have been heavily criticized by the Left Wing for that."

Case Title: Subramanian Swamy Vs. Union of India and Ors.