Swamy preparing to move court against SpiceJet deal

Likely to rake up the issue of open offer exemption availed of by Ajay Singh

Bharatiya Janata Party (BJP) leader Subramanian Swamy has said all was not well with low-cost carrier SpiceJet’s takeover by one of its founders Ajay Singh, and hinted he might file a public interest litigation (PIL) seeking probe into the alleged violations.

“The next major scandal for PIL is the sale of SpiceJet. VHSites send me any media links on price paid, Sebi (Securities and Exchange Board of India) fraud, Isle of Man, etc,” Swamy wrote on microblogging site Twitter on Monday. Sources said Swamy had already written to the Prime Minister’s Office and other key authorities demanding more disclosures and probes.

SpiceJet declined to comment on the issue.

Though Singh and entities controlled by him bought a stake of around 59 per cent from Kalanithi Maran-controlled entities earlier this year, there has not been any open offer. Singh has been quoted as saying that he was seeking an exemption from the open offer, citing a provision in the Securities and Exchange Board of India’s (Sebi) takeover rules for acquisitions through “schemes” sanctioned by “competent authorities”.

Their contention was that the buyout was through a ‘revival’ scheme for SpiceJet permitted by the civil aviation ministry. However, experts have questioned this exemption.

Swamy went on to say in other twitter conversations that Sebi had not acted correctly in allowing the acquirers to get away without making an open offer to shareholders. “Yes, Sebi has broken the law. They have no discretionary power,” the leader, who played a key role in several corruption investigations, including the 2G spectrum one, tweeted.

Swamy had earlier opposed when Abu Dhabi-based Etihad Airways was looking to invest in Jet Airways two years ago. When Etihad picked up a stake and signed a shareholder agreement with Jet promoters led by Naresh Goyal in 2013, Swamy wrote to the market regulator seeking an open offer. The Abu Dhabi airline in April of that year agreed to purchase a 24 per cent stake in Jet for $379 million. While this was less than the 25 per cent threshold mandated for open offers under the takeover law, Swamy told Sebi that the regulator needed to consider the foreign airline and the promoters as persons acting in concert.

He had also filed a petition in the Supreme Court seeking to block the bilateral air services agreement between India and the United Arab Emirates which was seen as a sweetener for Etihad Airways. India had agreed to approve an unprecedented 36,670 seats on weekly flights between India and the UAE. The Jet-Etihad deal later went through after substantial changes to the shareholder agreement.