Dr. Subramanian Swamy vs Union Of India & Ors
2014 Latest Caselaw 790 Del

*       IN THE HIGH COURT OF DELHI AT NEW DELHI

                                    Date of Decision: 11th February, 2014

+       WP(C) No. 5909/2013 & CM.No.13039/2013 & 14134/2013 (both
        of the petitioner for interim relief)

        DR. SUBRAMANIAN SWAMY                                    ..... Appellant
                           Through:      Petitoner-in-person along with
                           Mr. Ishkaran Singh Bhandari,
                           Ms. Supriya Manan and
                           Mr. Yatinder Chaudhary, Advs.

                                  Versus

        UNION OF INDIA & ORS                            ..... Respondents

Through: Mr. Mohan Parasaran, SG alongwith Mr. Rajeeve Mehra, ASG, Ms. Anjana Gosain, Mr. Pradeep Desodya, Mr. B.V. Niren and Mr. Kartikey Mahajan,Advs. For R- 1 to 4.

Dr. Abhishek M. Singhvi, Sr. Adv. along with Ms. Ruby Singh Ahuja, Mr. Rustam Mulla, Mr. Jainveer Shergil, Ms. Naomi Chandra and Ms. Anisha Mitra, Advs. for R-5.

CORAM:

HON'BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

CM.No.13039/2013 & 14134/2013 (both of the petitioner for interim relief)

1. This petition filed in public interest impugns the decision dated 3rd

April, 2013 of the Government of India and the Foreign Investment

Promotion Board (FIPB) allowing Foreign Direct Investment (FDI)

proposal in favour of the respondent no.5 Airasia (India) Private Limited.

The petition also seeks - (i) setting aside/revocation of all further

approvals/permissions issued to the respondent no.5 based upon or in

furtherance of the impugned decision dated 3 rd April, 2013; (ii) to

prohibit the respondents from taking any action contrary to the applicable

FDI policy as per Press Note No. 6 of 2012 read with Directorate General

of Civil Aviation (DGCA) Guidelines dated 1st March, 2013 or from

granting any approval for foreign investment by a foreign airline in a

greenfield airline project; (iii) mandamus directing the respondents to

define the terms "substantial ownership" and "effective control" and the

meaning to be ascribed to them under the FDI Policy as per Press Note 6

of 2012 ; (iv) a direction to the Central Bureau of Investigation to

investigate into the role and functioning of Government of India and the

FIPB leading to the impugned decision dated 3rd April, 2013.

2. Notice of the petition was issued to the respondents no. 1 to 4 only

i.e. not to the respondent no.5 Airasia (India) Private Limited. The writ

petition was accompanied with CM.No.13039/2013 for ex parte ad

interim relief of stay of the impugned decision dated 3 rd April, 2013

and/or from restraining the respondents from granting any further

approval/NOC to the respondent no.5. Notice of the said application was

also issued though no ex parte ad interim stay granted. The petitioner

thereafter filed CM.No.14134/2013 averring that in the absence of any

interim order, the respondents were going ahead with the illegalities

impugned in the petition and seeking immediate interim orders in terms

of the earlier application. Notice of the said application was also issued.

A counter affidavit and reply has been filed by the respondents no. 1 to 4

and to which rejoinder has been filed by the petitioner.

3. We have heard the petitioner appearing in person, the Solicitor

General appearing for the respondents no. 1 to 4 as well as the senior

counsel for the respondent no.5 who appears though notice has not been

issued to the said respondent.

4. The case of the petitioner is -

a) that as per the Consolidated FDI Policy effective from 10th

April, 2012 announced by the Department of Industrial Policy

and Promotion, Ministry of Commerce and Industry,

Government of India, no foreign airline was allowed to

participate directly or indirectly in the equity of an Air

Transport Undertaking engaged in operating Scheduled and

Non Scheduled Air Transport Services except Cargo airlines;

(b) that for review of the FDI Policy in Civil Aviation Sector, a

meeting of the Cabinet Committee on Economic Affairs was

called to consider the proposal, "to also permit foreign airlines

to invest in the capital of Indian companies operating scheduled

and non scheduled air transport services upto the limit of 49%

of their paid up capital on the Government approved route";

(c) that the rationale for the said proposal, as per notice of the said

meeting, was that "private airlines in the country are in dire

need of funds for their operations and service up-gradation, to

compete with other global carriers" and "denial of access to

foreign capital could result in the collapse of many of our

domestic airlines, creating a systemic risk for the financial

institutions and a vital gap in the country‟s infrastructure";

(d) that as per the Press Note No. 6 (2012 series) issued by the

Department of Industrial Policy and Promotion, Ministry of

Commerce and Industry, Government of India, on the subject

of "Review of the Policy on Foreign Direct Investment in the

Civil Aviation Sector", "the Government of India has reviewed

the position in this regard and decided to permit foreign airlines

also to invest in the capital of Indian Companies operating

scheduled and non scheduled air transport services, upto the

limit of 49% of their paid up capital";

(e) that as per the Guidelines for Foreign Direct Investment in

Civil Aviation Sector issued by the DGCA also on 1st March,

2013, the decision of the Government of India was to permit

foreign airlines also to invest in the capital of Indian

Companies "operating scheduled and non scheduled air

transport services" upto the limit of 49% of their paid up

capital;

f) that thus, as per the decision of the Cabinet Committee on

Economic Affairs, FDI upto 49% was permitted only in Indian

Companies already operating scheduled and non scheduled air

transport services;

g) however the Government of India and the FIPB had on 3rd

April, 2013 granted approval to M/s Airasia Investment

Limited, Malaysia to incorporate a new Joint Venture Company

with a foreign equity of 49% and with the balance 51% equity

to be held by M/s Tata Sons Limited and M/s Telestra Trade

Private Limited for carrying on scheduled and non scheduled

air transport services in the country;

h) that the grant of approval of FDI in a company yet to be

incorporated and which till now is not engaged in operating

scheduled and non scheduled air transport services, is contrary

to the FDI policy permitting FDI only in existing airlines.

5. The petitioner relied on Noida Entrepreneurs Association Vs.

Noida & Ors. (2011) 6 SCC 508, 521 wherein it was observed that ït is a

settled proposition of law that whatever is prohibited by law to be done,

cannot legally be affected by an indirect and circuitous contrivance on the

principle of quando aliquid prohibetur, prohibetur at omne per quod

devenitur ad illud, which means, "whenever a thing is prohibited, it is

prohibited whether done directly or indirectly" and on Jagir Singh Vs.

Ranbir Singh (1979) 1 SCC 560, laying down that an authority cannot be

permitted to evade a law by "shift or contrivance".

6. Per contra, the Solicitor General has contended that the petitioner

is misconstruing the FDI Policy as permitting FDI to the extent of 49%

only in domestic companies already engaged in the business of providing

scheduled and non scheduled air transport services, when there is no such

restriction in the policy. He has during the hearing handed over the

Consolidated FDI policy effective from 5th April, 2013 and wherefrom it

is shown that where ever the decision was to treat greenfield and existing

projects separately, they are separately mentioned. It is contended that in

relation to the air transport services, no distinction is made between

greenfield and existing projects. It is argued that the entire case of the

petitioner is based on a distinction between greenfield and existing

airlines and which distinction does not exist in the FDI Policy for air

transport services.

7. It is also argued, that the DGCA has vide public notice dated 13th

January, 2014 in compliance of the requirements of Schedule XI of

Aircraft Rules 1937 invited objections and suggestions from the members

of the public on the proposal of M/s Airasia (India) Pvt. Ltd. for grant of

Air Operators Permit (Scheduled) for the purpose of providing Scheduled

Air Transport Services in India. It is contended that the objection if any

of the petitioner to the grant of approval by FIPB to the respondent no.5

should also be raised with the DGCA and which as per Rule 134 is

competent to adjudicate the same.

8. Reliance is placed on Manohar Lal Sharma Vs. Union of India

(2013) 6 SCC 616 to contend that the grant of approval to the respondent

No.5 is in public interest as the same will increase competition and bring

down the air fares.

9. The petitioner has intervened to contend that the Consolidated FDI

Policy relied upon by the Solicitor General is effective from 5 th April,

2013 when the decision of the FIPB impugned in this petition is of prior

thereto that of 3rd April, 2013.

10. The learned Solicitor General has clarified that though the policy as

per the endorsement on the cover of the booklet is shown as effective

from 5th April, 2013, but as per its contents, is from the date of issuance

of the Press Note on 14th September, 2012.

11. We have during the hearing also inquired from the petitioner as to

what is the public interest in the petitioner filing this petition with the

relief having effect of preventing respondent no.5 from providing air

transport services in the country.

12. The petitioner has contended that the grant of licence to the

respondent no.5 would be to the prejudice of Air India being the national

carrier and which is already suffering losses.

13. The senior counsel for the respondent no.5 has also argued that

there is no public interest and any obstacle in allowing the respondent

no.5 to commence air transport operations in the country would be to the

detriment of the consumers. Reliance is placed on Ashok Kumar Pandey

Vs. State of West Bengal (2004) 3 SCC 349 laying down the scope of

Public Interest Litigation. It is argued, that the petitioner has no case lest

a prima facie case; that if FDI were to be permitted only in existing

airlines there was no need for a policy; that there is no law which bars the

Government of India from revising the policy; that from the language of

the Note for the meeting of the Cabinet Committee on Economic Affairs

or the Press Note issued in pursuance thereto, it cannot be said that FDI

has been permitted in the existing airlines only; that the FDI Policy is not

capable of any other interpretation; that any interference by the Court at

this stage will scare away the investors and will lead to a policy paralysis.

14. The petitioner in rejoinder has invited attention to Minutes of the

subject Meeting of the FIPB, where the stand of the Ministry of Civil

Aviation was that the FDI permitted in the air transport services as per

Press Note aforesaid was not in a joint venture yet to be incorporated and

was aimed at infusing capital into the existing cash-starved aviation

companies; however the FIPB brushed aside the said objection of the

Ministry of Civil Aviation.

15. The Solicitor General has invited attention to the version of the

Department of Industrial Policy and Promotion (DIPP) in the meeting of

the FIPB to the effect that the Press Note supra did not refer to the

existing airlines only and as such no clarification was required.

16. We have considered the aforesaid contentions for the limited

purpose of interim relief.

17. As would be borne out from the aforesaid, the entire challenge to

the FIPB approval for FDI in respondent no.5 which is not an existing

airline and is yet to commence air transport operations, is based on the

plea that from the use of the words „operating scheduled and non

scheduled air transport services‟ in the FDI policy announced in the year

2012, FDI is permitted only in companies „already operating‟ scheduled

air transport services in the country and not in companies which are not

„already engaged‟ in the business of providing scheduled and non

scheduled air transport services.

18. We are reluctant to, at this interim stage, hold that from a mere use

of the words "operating scheduled and non scheduled air transport

services", it can be held that the policy of the Government of India

announced vide Press Note No. 6 of 2012 supra is to allow FDI in

„existing airlines‟ only and not in „proposed/new airlines‟. The learned

Solicitor General is correct in his contention that if that had been the

intent of the Government, nothing prevented the Government from

expressly stating so.

19. Undoubtedly, in the deliberations leading to the FDI Policy

announced vide Press Note No. 6 of 2012 supra, one of the considerations

was the dire need of the existing airlines for infusion of foreign funds.

However that again cannot necessarily lead to the conclusion, in the

absence of anything else, that the decision was to allow FDI only in

existing airlines and not in new/proposed airlines.

20. Yet again, though the Ministry of Civil Aviation in the FIPB

meeting of 6th March, 2013 took a stand that as per the Policy, FDI was

permitted only in existing airlines but the version of DIPP was otherwise

and which version was accepted by the FIPB. FIPB is a high level body

comprising of Secretaries of the Departments of i) Economic Affairs,

Ministry of Finance; ii) Industrial Policy and Promotion, Ministry of

Commerce and Industry; iii) Commerce, Ministry of Commerce and

Industry; iv) Economic Relations, Ministry of External Affairs; and v)

Ministry of Overseas Indian Affairs, with power to co-opt other

secretaries to the Central Government and top officials of financial

institutions, banks and professional experts of Industry and Commerce

and we are of the view that at least at this interim stage, once the FIPB

inspite of the objections of the Ministry of Civil Aviation as to the

interpretation of the policy, approved FDI into respondent no. 5, it is not

for this Court to interfere. A Division Bench of this Court in Geeta

Kapoor Vs. Union of India 119 (2005) DLT 33 held that where the

appropriates authorities (in that case, RBI and SEBI) and the Government

of India have taken a decision and have examined the case, it would not

be wise for this Court to sit as an Appellate Court, in a Public Interest

Litigation.

21. It cannot be lost sight of that though as per the Ministry of Civil

Aviation which had also participated in the meeting of the Cabinet

Committee on Economic Affairs, the decision was to permit FDI only in

existing airlines and which means the said aspect must have been

deliberated in the said meeting, but in the policy ultimately announced

vide Press Note supra, no such distinction was made and from the mere

use of the word "operating scheduled and non scheduled air transport

services" we are unable to find any such decision, to allow FDI only in

existing airlines.

22. We are also not unmindful of the fact that we are called upon to

interpret a policy of the Government of India which is essentially an

executive function, and not a statute.

23. The Government of India, upon this challenge being made by the

petitioner, has taken a categorical stand as to what it meant by the policy

aforesaid.

24. The stand of the Government of India before this Court is really the

understanding of the Government of India of its own policy and in our

opinion, at least at this interim stage, it is not for the petitioner to contend

as to what the Government should understand from its own policy and

these matters, specially being in the domain of economic policy are not

subject to challenge.

25. The present petition entails interpretation of the policy by the

Government which created the policy. It cannot be lost sight of that even

if the Government was earlier of the view that FDI is to be permitted in

existing airlines only, nothing prevented the Government from

subsequently allowing FDI in a new/proposed airline also and which is

neither the subject matter of challenge nor can be the subject matter of

judicial review. The policy was formulated by the Government and the

Government cannot be precluded from clarifying or amending its policy

which is executive in nature. The matter is strictly within the domain of

the internal functioning of the Government. The question, how a

particular policy is to be interpreted has to be necessarily, at least at this

stage, answered in favour of the Government and the petitioner cannot be

heard to object. It was so held by a single Judge of this Court in

Federation of Associations of Maharashtra Vs. Union of India

MANU/DE/1200/2004 and at this interim stage we have no reason to take

a different view. Another Division Bench of this Court in Ojas

Industries P. Ltd Vs. Union of India MANU/DE/0098/2006 held that in

interpreting economic regulatory measures, the Court should be cautious

that in the garb of interpretation, the whole scheme is not disturbed as the

Courts are not experts in the economic field and should defer to the

opinion of the experts, rather than apply their own notions as to what is

proper and what is improper. It was further held that economic

regulatory measures often have implications and ramifications over the

whole economy and it is not proper for Courts to tinker with the same.

26. The Supreme Court also recently in Rohitash Kumar Vs. Om

Prakash Sharma AIR 2013 SC 30 observed that administrative

interpretation may often provide the guidelines for interpreting a

particular Rule or executive instruction and the same may be accepted,

unless of course it is found to be in violation of the Rule itself. Similarly,

we are prima facie unable to find the Government in its stand before this

Court to be wrongly interpreting its FDI policy. The Supreme Court

earlier also in P.H. Paul Manoj Pandian Vs. P. Veldurai (2011) 5 SCC

214, laid down that one of the accepted principles of interpretation is as to

how those, who are conversant with the government order and are

expected to deal with the same, construe and understand the order and

that the opinion expressed by the government officials who are expected

to have sufficient knowledge and experience as to how a government

order should be operated and/or implemented may be relied upon.

27. The Supreme Court in Balco Employees Union (Regd.) v. UOI

(2002) 2 SCC 333 has held that the Courts while adjudging the

constitutional validity of an executive decision relating to economic

matters grant a certain measure of freedom or 'play in the joints' to the

executive and that it is the prerogative of each elected Government to

follow it's own policy and a matter of policy cannot per se be interfered

with by the Court and wisdom and advisability of economic policies are

ordinarily not amenable to judicial review. It was also held that if a

considered policy decision has been taken which is not in conflict with

any law or is not mala fide, it would not be in public interest for the Court

to go into and investigate those areas which are the function of the

executive. The Supreme Court in the said judgment also cautioned the

Courts from allowing their process to be abused by politicians and others

to delay legitimate administrative action or to gain a political objective

and noticed the recent feeling of public interest litigation tending to

become publicity interest litigation or private interest litigation. It was

also laid down that no relief by way of stay, especially with respect to

public projects and schemes or economic policy or schemes should be

granted without putting the petitioner to appropriate terms such as

providing an indemnity or an adequate undertaking to make good the loss

or damage in the event the PIL is dismissed. Considering the nature of

interim relief claimed by the petitioner in the present case, we fail to see,

how the petitioner can be directed to make good the loss which will be

caused from the interim stay sought if the petition is ultimately dismissed.

28. The Constitution Bench in Natural Resources Allocation, In re,

Special Reference No. 1 of 2012 (2012) 10 SCC 1 after considering a

plethora of case-law has reiterated that the Courts will not compare which

policy is fairer than the others and strike down a policy only if it is found

to be patently unfair to the extent that it falls foul of the fairness

requirement of Article 14 of the Constitution. We are at this interim stage

unable to return any such finding with respect to the impugned decision.

29. Coming back to the interpretation of the Press Note No. 6 of 2012

supra, we may notice that the FDI policy as existing prior thereto and as

filed by the petitioner at page 130 of the paper-book, also was "no foreign

airlines would be allowed to participate directly or indirectly in the equity

of an Air Transport Undertaking engaged in operating Scheduled and

Non-Scheduled Air Transport Services except Cargo airlines ". It is not

the case of the petitioner that the aforesaid prohibited foreign airlines

only from participating in the equity of „existing‟ airlines and not from

participating in the equity of new airlines. Rather the admitted position is

that no FDI was then permitted neither in existing nor in new/proposed

airlines. The Government of India in the Press Note No. 6 of 2012 supra

while permitting FDI to the extent of 49% used the same

language/phraseology. When earlier, on the same language/phraseology

there was no distinction between existing and new/proposed airlines,

there is no reason to carve out any such distinction now.

30. We are thus of the view that no case for grant of interim relief

sought is made out. The applications are dismissed.

31. Needless to state, none of the observations contained herein would

affect the final adjudication.

WP(C) 5909/2013

List of hearing on 5th March, 2014.

CHIEF JUSTICE

RAJIV SAHAI ENDLAW, J.

th FEBRUARY 11 , 2014/M.