New Delhi, May 9: The Supreme Court today upheld the $8.5-billion Cairn-Vedanta deal, which got the Centre’s approval last year but drew flak from the Comptroller and Auditor General (CAG).
A two-judge bench of justices K.S. Radhakrishnan and Dipak Misra today dismissed a public interest litigation (PIL) filed by Arun Kumar Agrawal challenging the approval granted by the government on January 24, 2012, to the acquisition of a majority stake in Cairn India by UK-based Vedanta Group as the deal had allegedly caused a loss of over Rs 1 lakh crore to the exchequer.
“The CAG report is always subject to scrutiny by Parliament and the government can always offer its views on the report. The report is subject to parliamentary debates and it is possible that the PAC (public accounts committee) can accept the ministry’s objection to the report or reject the report,” Justice Radhakrishnan said.
The petitioner, through counsel Prashant Bhushan, sought a CBI investigation into the deal. The PIL alleged that there was a clause in the agreement between the Cairn group and Oil and Natural Gas Corporation (ONGC) that in case the former wanted to sell its shares in Cairn India, it would first offer the same to ONGC and this right was “not asserted” by the oil PSU and the Centre.
The court said it would not be proper for the judiciary to scrutinise such complex economic matters unless there was clear-cut arbitrary and mala fide action on the part of the authorities. The bench after going through all the aspects came to the conclusion that the decision taken by ONGC not to exercise its right of first refusal was taken after elaborate and due deliberations as the price of shares was in excess of the intrinsic value.
“The report of SBI Caps also supported the decision taken by the ONGC. The decision to grant no-objection to the transfer of shares of Cairn Energy India from Cairn to Vedanta was also on the basis that the proposed price of share at Rs 355 apiece, was well in excess of its intrinsic value,” the bench said, adding that the SBI had evaluated each share of Cairn Energy at Rs 291.
