2023 (3) TMI 705 - HC - FEMA

Court disposes petition challenging foreign equity JV approval for FDI Policy violations due to petitioner's disinterest, shareholding changes.

The court disposed of the writ petition challenging a decision approving a joint venture company with foreign equity, alleging violations of the Foreign ... Justiciability of academic controversy - public interest litigation - Foreign Direct Investment policy - settlement / abandonment by petitioner - sealing and custody of confidential status reportsJusticiability of academic controversy - public interest litigation - The writ petition challenging the FIPB approval was rendered academic and was disposed of on the petitioner's statement of no longer wishing to pursue the petition. - HELD THAT: - The Court noted that the shareholding structure of the company subject to the impugned approval had undergone material changes over time and that there was no foreign investment as of the date of the order. In these circumstances, and in view of the petitioner's explicit statement in person that he was no longer interested in pursuing the petition, the Court treated the controversy as academic and disposed of the writ petition. The Court therefore did not proceed to adjudicate the merits of the challenge to the impugned approval under the Foreign Direct Investment policy. [Paras 11, 12]Writ petition disposed as academic on petitioner's statement of abandonment.Sealing and custody of confidential status reports - Sealed status reports filed by investigating agencies were re-sealed and handed over to their counsel. - HELD THAT: - The Court perused the sealed-status reports submitted by the CBI and the Enforcement Directorate. Having considered the filings, the Court re-sealed those reports and directed that the sealed covers be handed over to the learned counsel for the CBI and the ED, thereby preserving their confidentiality and custody with the respective agencies' counsel. [Paras 10, 13]Sealed reports re-sealed and delivered to counsel for CBI and ED.Final Conclusion: The petition challenging the Government's approval was disposed of as academic following material changes in shareholding and the petitioner's withdrawal; sealed status reports from investigating agencies were re-sealed and returned to their counsel. Issues involved:The judgment involves a challenge to a decision approving a joint venture company with foreign equity, based on alleged violations of Foreign Direct Investment Policy and guidelines by the Union Ministry of Civil Aviation. The petitioner sought various writs to set aside the decision, prohibit actions contrary to FDI policy, define terms 'substantial ownership' and 'effective control,' investigate the decision-making process, and issue further directions.Details of the Judgment:Violation of FDI Policy and Guidelines:The petitioner challenged a decision approving a joint venture company with foreign equity, alleging violations of the Foreign Direct Investment Policy and guidelines by the Union Ministry of Civil Aviation. The decision allowed M/s Air Asia Investment Ltd. to form a new joint venture company with foreign equity of 49%, which the petitioner contended was contrary to the FDI Policy of the Government of India and objections by the Nodal Ministry.Prayers of the Petitioner:The petitioner sought various reliefs, including setting aside the impugned decision, revoking any further approvals based on it, prohibiting actions against FDI policy, defining 'substantial ownership' and 'effective control,' investigating the decision, and issuing necessary directions. The petitioner also filed an application for stay, which was rejected by the Court.Changes in Shareholding:Subsequent to the filing of the writ petition, significant changes occurred in the shareholding of Air Asia (India) Pvt. Ltd. The shareholding structure was revised multiple times, with Tata Sons Ltd., Air Asia Investment Ltd., and Telestra Tradeplace Pvt. Ltd. holding varying percentages of shares at different points in time.Disposal of the Writ Petition:As there was no foreign investment at the time of the judgment, the petitioner expressed disinterest in pursuing the writ petition. Consequently, the Court disposed of the petition based on the petitioner's statement. The sealed cover reports submitted by the Central Bureau of Investigation (CBI) and Enforcement Directorate (ED) were re-sealed and handed over to their respective counsels.This summary provides a detailed overview of the issues raised in the judgment, the contentions of the petitioner, the changes in shareholding, and the ultimate disposal of the writ petition.