Subramanian Swamy moves SC seeking to quash AirAsia India clearance

New Delhi: Janata Party leader Subramanian Swamy on Thursday filed a petition in the Supreme Court seeking a quashing of the clearance granted to AirAsia India Pvt. Ltd.

In his 60-page public interest litigation (PIL), Swamy termed the clearance as illegal and said several issues related to foreign control and policy had been overlooked in granting it.

AirAsia India is a new airline company in which Malaysia’s AirAsia Bhd has a 49% stake, Tata Sons Ltd has 30%, and Arun Bhatia’s Telestra Tradeplace Pvt. Ltd has the rest.

Swamy’s previous accusations against the government on alleged irregularities in the allotment of spectrum to telcos, and in the deal between Jet Airways (India) Ltd and Etihad Airways PJSChave blown up into controversies that continue to embarrass the ruling Congress party.

In the AirAsia case, Swamy says the government’s clearance to AirAsia India is in violation of a September policy that allowed foreign airlines to invest in Indian airlines.

At the time, this was interpreted to mean that the investment would be in existing Indian airlines, which later was clarified by some arms of the government to include both existing and new airlines.

In the petition, which was filed but is yet to be admitted by the apex court, Swamy has asked it to prohibit government authorities “from taking any action contrary to the applicable FDI (foreign direct investment) policy as per Press Note No. 6 of 2012 read with DGCA Guidelines dated 01.03.2013 or from granting any approval for foreign investment by a foreign airlines in a greenfield airline project”.

An AirAsia spokesman declined to comment on the matter.

Swamy said in any investment in an Indian airline by a foreign carrier, control has to remain with Indian nationals as per Indian law.

In AirAsia’s case, however, the Indian owners Tata and Telestra are bound by clauses in their agreements that would leave control with Malaysia's AirAsia, he said. “Malaysia was ‘silent’ in respect of details that were otherwise mandatorily required to be examined and considered by the approving authority,” he said, referring to the agreement presented by AirAsia India to the Foreign Investment Promotion Board (FIPB).

Swamy said it was “amply clear from the construct of the shareholder’s arrangements” that while the majority shareholding of 51% is divided between Tata Sons and Telestra, the effective control lies with the foreign investor.

“Curiously even the investment of TSL (i.e. 30% Indian Shareholding) is strictly limited to merely USD 9 (nine) million with no obligations or responsibilities as a shareholder, in any form for the management or control of the business,” Swamy said in his petition, adding, “As far as Telestra is concerned, it has no rights whatsoever to exercise any control over the day to day operations and management of the business and is a mere investor with one director entitled merely to attend board meetings.”

An analyst said while the issues related to the new airline should be resolved it was critical for India to welcome AirAsia India.