The Supreme Court on 8 May 2013 dismissed a PIL challenging 8.5 billion US Dollars Cairn-Vedanta deal and its validity.
A bench of justices comprising of K.S. Radhakrishnan and Dipak Misra asserted that the decision by the Centre and ONGC pertaining to the deal was taken after due consideration and the court is not liable to sit in judgment on the decision taken by parties in business dealing.
The PIL was filed by a resident of Bangalore Arun Kumar Agarwal who had alleged that there was a clause in the agreement between Cairn group and ONGC that in case Cairn Group wanted to sell its shares in Cairn India, it would first offer the same to ONGC and this right was “not asserted” by the PSU and the Centre.
It was also alleged that the decision on the deal had been made on extraneous considerations and without taking into account the relevant aspects.
As per the clause, Cairn could sell its shares to other parties only after ONGC refused to buy the stake and ONGC, thus, had the right of first refusal (ROFR).
As per the petitioner 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 one lakh crore Rupees if ONGC had insisted on enforcing the clause.
About Cairn India Ltd
Cairn India Ltd, a subsidiary of UK-based Cairns 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 majority stake in Cairn India for a consideration of around 8.5 billion US Dollars without offering the shares to its partner ONGC in the joint venture as per the agreement of right of first refusal.