SC throws out plea against $8.5-bn Cairn-Vedanta deal
09 May 2013
The Supreme Court today refused to block the $8.5 billion deal between Vedanta Resources and Cairn Energy, under which Vedanta is to acquire the oil explorer's Indian assets.
A bench of Justices K S Radhakrishnan and Dipak Misra dismissed a public interest case (PIL) challenging the validity of the deal. It said that the decision by the union government and Oil & Natural Gas Corp pertaining to the deal was taken after due deliberation and the court cannot sit in judgement on a business dealing.
The bench also said there were no extraneous considerations involved in the deal.
The court delivered the judgement on the PIL filed by Bangalore resident Arun Kumar Agarwal, who had alleged that there was a clause in the agreement between Cairn and ONGC that in case the Cairn group wanted to sell its shares in Cairn India, it would first offer these to ONGC; and this right was "not asserted" by the public sector explorer and the centre.
He had also alleged that the decision on the deal had been made on "extraneous considerations" and without taking into account the relevant aspects.
The petitioner had alleged that Cairn Energy had violated the clause and signed a deal with Vedanta group to sell its shares in Cairns India without making an offer to ONGC, and that the exchequer would have benefited by over Rs1,00,000 crore if ONGC had insisted on enforcing the clause.
Cairn India Ltd, a subsidiary of UK-based Cairn Energy, is the operator of the Rajasthan oil block. It had entered into an agreement with UK-based Vedanta Group on 16 June 2010, to sell its stake in Cairn India for a consideration of around $8.5 billion, without offering the shares to its partner ONGC in the joint venture as per the agreement of right of first refusal, the PIL had said.