The Delhi High Court on Friday directed the Tata Sons - AirAsia Berhad (Malaysia) joint venture — AirAsia India — to submit its brand-licensing agreement (BLA) with the Malaysian entity to the Directorate General of Civil Aviation (DGCA) within one week to determine who actually controls the Indian low-cost carrier.
On paper, the Tata Group owns a 51 per cent stake in AirAsia India Private Limited, while AirAsia Berhad (Malaysia) owns the remaining 49 per cent.
The high court order comes on an over two year old petition by Rajya Sabha MP Subramanian Swamy and the Federation of Indian Airlines (FIA), alleging the airline of violating Indian aviation norms to secure its operating license in 2014 and demanding immediate cancellation of the same.
Ever since commencing its business, AirAsia has witnessed considerable turbulence including the exits of several of top-level executives and serious allegations of fraudulent activity and financial irregularity.
The controversy surrounding AirAsia India received renewed impetus after former Tata Sons chairman Cyrus Mistry's recent allegations of unethical activities within the airline and possible monetary misappropriations worth Rs 22 crore, involving non-existent parties in India and Singapore.
The fresh fodder seems to have armed the FIA—Swamy duo who came all guns blazing on Friday, in a bid to continue their challenge to the grant of license to the airline in the high court.
In Friday's hearing before the bench of Chief Justice G Rohini and Justice Pradeep Nandrajog, the petitioners moved applications attempting to compel the production of further documentation in support of their claims and to secure the inclusion of R Venkataramanan, Managing Trustee of the Sir Dorabji Tata Trust and a member of the Board of AirAsia India in the ongoing proceedings.
Swamy and counsel for FIA, senior advocate Arvind Nigam began the day's events by reiterating how AirAsia India had been engaged in several fraudulent acts, including the violation of foreign direct investment regulations and failures in meeting civil aviation requirements that prohibit a foreign entity from controlling a domestic aircraft operator, including the making of false declarations to that effect.
Referring to Mistry's statements and press leaks on the subject, the petitioners highlighted that Air Asia India's BLA with AirAsia Berhad held the key to substantiate their assertions of how the airline had obtained its license through fraud and non-disclosure. They also submitted that the agreement had never been filed anywhere and that the DGCA had granted the airline its license without investigating into the managerial control of the carrier.
In response, senior advocate Abhishek Manu Singhvi defended AirAsia India's stance by stating that the airline had never hidden the existence of the BLA and was not under any obligation to submit the document to the DGCA while gaining its license. "The agreement is a highly confidential document. Why should it be produced when we (Air Asia India) were not required to do so?" Singhvi stated before the court.
Singhvi called the proceedings a fishing expedition and drew the court's attention to a special leave petition filed by the FIA in the Supreme Court, where the federation had attempted to gain a stay of AirAsia India's license on the ground that the Delhi High Court was delaying the matter, even though it was the petitioners' frequent applications on unrelated matters that had caused the case to be repeatedly adjourned. The AirAsia India counsel also offered to submit the BLA in a sealed envelope to the court, which in his opinion was the only authority capable of demanding the document.
After hearing the arguments advanced, the bench differed with Singhvi's contentions and held that the DGCA was the ultimate decision-making body under the Aircraft Rules, 1937. As such, the grant of license by the authority required the application of mind and the perusal of all such agreements that could contain material particulars to aid it in reaching its ultimate decision.
The court then directed AirAsia India to submit the BLA to the DGCA by November 18, after which the regulator is to conduct an inquiry and file its report within four weeks. The bench has listed the matter for further consideration on December 16.
Resource: http://www.business-standard.com/
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