The Centre was on Wednesday directed by Delhi High Court to respond to a plea filed by Bharatiya Janata Party leader Subramanian Swamy seeking to restrain the government from granting any approval for investment by a foreign airline in a greenfield airline project like AirAsia.
A bench of Chief Justice N V Ramana and Justice Manmohan issued notice to Civil Aviation Ministry, DGCA and others and sought their response by October 30.
Swamy, who filed the application in his pending PIL against AirAsia, sought stay of the deal and claimed that the government is scheduled to consider another similar deal between Singapore airlines and Tatas this month.
The BJP leader has sought a direction for restraining Centre from taking any action or decision or granting any further or other approvals/permission/NOC/permits etc. contrary to the applicable foreign direct investment policy and DGCA guidelines or granting any approval for foreign investment by a foreign airlines in a greenfield airline project.
He has filed the plea as part of his pending PIL which seeks quashing of permission given to AirAsia for its operations on which notices have been issued to the Centre, Foreign Investment Promotion Board and Commerce and Civil Aviation ministries for October 30.
It had asked the government to "file an affidavit explaining the government's policy on the issue".
Swamy had first moved the apex court
In April, the FIPB gave clearance to the $30 million deal between Malaysia-based AirAsia and Tata Sons.
Swamy's PIL opposes clearance to the deal on the ground that according to government policy, foreign direct investment up to 49 per cent is allowed in existing airlines which are already in operation and not to new or proposed joint ventures.
The policy was brought to boost the aviation industry which was undergoing financial crisis, the petition said.
Swamy in his PIL alleged that it is "clearly contrary to the Foreign Direct Investment policy" and also against "the guidelines notified by the nodal ministry, the Union Ministry of Civil Aviation, which does not permit foreign investment by a foreign airline, in such a greenfield airline".
He said the FDI policy requires that "effective control" of the joint venture will be vested with Indian nationals.
He also alleged that the joint venture, in which Tata Sons Ltd has 30 per cent stake, Arun Bhatia-led Telestra Tradeplace Pvt Ltd 21 has per cent and AirAsia the majority share holder with 49 per cent stake, is to start the operations in India contrary to the FDI policy.
AirAsia Berhad, a public listed Malaysian company which operates AirAsia through its wholly-owned investment vehicle Air Asia Investment Ltd had in February entered into an agreement with Tata Sons Ltd and Telestra Tradeplace Pvt Ltd to set up a joint venture company for passenger airline business in India.