SC approves Cairn deal with Vedanta
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Commending the Centre for what it called a prudent economic decision, the Supreme Court Thursday gave a thumbs up to the government's approval for the $8.48 billion deal by Britain's Vedanta Group to acquire a majority stake in Cairn India which had rights to explore oil and natural gas blocks in Rajasthan.
The verdict not only upholds a major deal between two private multinational firms, in the quest of commercial discovery of oil and natural gas under the government's exploration licensing policy in India, but also sets a precedent as far as judicial intervention in business decisions goes.
The court said in unequivocal terms that even if a decision turns out to be wrong eventually, a court would not be justified in questioning it if it was bona fide.
"We are of the view that on facts, as well as on law, the ONGC and the government of India have taken a prudent commercial and economic decision in public interest. We are not prepared to say that the decision is mala fide or actuated by any extraneous or irrelevant considerations or improper motive," held a bench led by Justice K S Radhakrishnan as it threw out a PIL challenging the rationale of the decision.
The PIL by Arun Kumar Agrawal had challenged the Centre's nod in 2011-12 to the Cairn-Vedanta deal, as a result of which a majority stake and consequently controlling rights in Cairn India Ltd, a subsidiary of Britain-based Cairn Energy, was sold to Vedanta. Cairn India was the operator of five oil blocks in Rajasthan at the time of the deal.
The PIL said that the government and the ONGC had, with ulterior motives and against the public interest, given up their preferential right to purchase stakes in Cairn India and this decision caused a loss of Rs 1 lakh crore to the public exchequer.