Apex Court upholds Cairn-Vedanta deal

The Supreme Court on Thursday upheld $8.5 billion Cairn-Vedanta deal, saying that the Centre and ONGC not exercising the right of pre-emption over sale of shares of Cairn India Limited (CIL) was a prudent commercial decision. The court said that the decision on not buying the shares of CIL was taken by the Centre and ONGC after considering various commercial and technical aspects and it cannot sit in judgement over the commercial or business decision taken by parties. "We are of the view that on facts, as well as on law, the ONGC and the Government of India have taken a prudent commercial and economic decision in public interest. We are not prepared to say that the decision is mala fide or actuated by any extraneous or irrelevant considerations or improper motive," a bench of justices K S Radhakrishnan and Dipak Misra said. "We notice that the ONGC and the Government of India have considered various commercial and technical aspects flowing from the Production Sharing Contract (PSC) and also its advantages that ONGC would derive if the Cairn and Vedanta deal was approved," it said. The court passed the order on a PIL alleging 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. The bench after going through all the aspects came to the conclusion that the decision taken by ONGC not to exercise its Right of First Refusal was taken after elaborate and due deliberations as the price of shares was in excess of intrinsic value.