Thaindian News

New Delhi, Feb 27 (IANS) The Supreme Court will hear March 2 a suit that wants the acquisition of Cairn India, the nation’s biggest onshore oil deposit, by Anil Agarwal-promoted Vedanta Resources declared invalid.

A public interest litigation (PIL) was filed in the apex court Monday seeking invalidation of the government approval for the Cairn Energy-Vedanta deal under which Vedanta acquired 41 percent stake of Cairn India in the Rajasthan oil block.

Lawyer Prashant Bhushan filed the petition on behalf of Arun Kumar Agrawal, a Bangalore-based financial expert. It wants the court to order an investigation into why the state-run Oil and Natural Gas Corp (ONGC) did not buy the shares. It also urges the court to order ONGC to buy controlling stake in Cairn India.

“Declare the Cairn Energy-Vedanta deal wherein Vedanta acquired shares of Cairn India and the Government’s approval of the said deal on 24.01.2012 as void ab initio,” the PIL said.

Vedanta completed the purchase of Cairn India in December after the government approved the deal in June.

Seeking the invalidation of the deal, the PIL said: “The government of India has allowed the transfer of the oil resources of the country worth lakhs of crores of rupees to a private company by giving up its own legal rights in complete violation of the public trust doctrine.”

The PIL urged the court to direct the ONGC “to exercise its right of preemption over the sale of shares of Cairns India on the same terms without causing any loss or profit to Cairns Energy.”

The petition said that if ONGC had exercised its preemption right then 41 percent of Cairn India’s shares added to its existing 30 percent share holding would have made the public sector company the majority stake holder in the Rajasthan oil block.

The PIL sought direction to “CBI to investigate the reasons for ONGC and the government in not asserting and exercising their legal rights under the ROFR and giving clearance of the Cairn-Vedanta deal on the basis of the existing right to share the royalty and cess on pro rata basis”.

The petitioner has also sought directions for CBI to investigate the abuse of authority by the petroleum ministry and ONGC by which ONGC (instead of Cairn) was made liable to pay the entire royalty at the rate of 20 percent and cess on the entire production instead of only on its 30 percent share of production on oil resources in the Rajasthan block.

The petition also sought direction to the Comptroller and Auditor General (CAG) and the government to calculate the losses from the payment of 100 percent royalty and cess by the ONGC before the Cairn-Vedanta deal and direct the ONGC/government to recover excess royalty paid by the ONGC from Cairn India.

The PIL has also sought direction to the CBI to investigate the considerations involved in the illegal extension of time given to Cairn Energy by the petroleum ministry for exploration of oil when it was fully aware that the area had billions of dollars of oil as was already highlighted in the report of the CAG.

The CAG had in its report pointed to unwarranted and irregular extensions given to Cairn Energy U.K. in Rajasthan block by the government for exploring oil when it was known that large quantities were discovered in adjacent area of blocks on which extension was sought.

According to the latest balance-sheet of Cairn India, the petition said the Rajasthan block has 6.5 billion barrel of oil in place capable of producing 1.4 billion barrels of oil. “The operating cost of extraction is mere $3.5/barrel while the sale price is over $100/barrel.”

The petition said a similar quantity of crude purchased by the country’s oil marketing companies in the international market would cost Rs.120 crore a day or Rs.44,000 crore a year with additional transport costs.

The petition said the vast oil reserve would represent 30 percent of the total crude oil production of the county.