Indian Supreme Court dismisses challenge to US$8.5 billion Cairn-Vedanta dealPublished by MAC on 2013-05-13
Source: Economic Times (2013-05-09)
UK-listed Vedanta shouldn't have acquired Cairn India and its lucrative share of Rajasthan's oil fields, without their first being offered to the state oil company ONGC.
So declared India's Supreme Court last week. However, the court confessed it was powerless to redress this palpable wrongdoing. For earlier article, see: Is Vedanta poised on the brink of failure?
Supreme Court dismisses plea challenging $8.5 billion Cairn-Vedanta deal
9 May 2013
NEW DELHI: The Supreme Court on Thursday rejected a challenge to the $8.5 billion Cairn-Vedanta deal.
A PIL [public interest litigation] had challenged the deal on the ground that there was a loss to state-owned ONGC on account of the sale. The apex court said that Cairn Energy should have first offered any shares in Cairn India to JV [joint venture] partner ONGC.
A bench of justices K S Radhakrishnan and Dipak Misra said that the decision by the Centre and ONGC pertaining to the deal was taken after due deliberation and the court cannot sit in judgement on the decision taken by parties in a business dealing.
The bench also said there was no extraneous considerations involved in the deal.
"Neither ONGC nor the government pressed this right," the Supreme Court said, alleging that this caused a Rs 1 lakh crore [approximately US$20 billion] loss to ONGC.
The court delivered the judgement on the PIL filed by Bengaluru resident Arun Kumar Agarwal who had alleged that there was a clause in the agreement between Cairn group and ONGC that in case Cairn Group wanted to sell its shares in Cairn India, it would first offer the same to ONGC and this right was "not asserted" by the PSU and the Centre.
The court cannot sit on judgement on an agreement between parties unless it is against the statute, SC said.
CAG figures are not the final word and are subject to interpretation and can be contested by the ministry, it said.
These can then be accepted or rejected by parliament, SC said.
(With inputs from PTI)