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IN THE HIGH COURT OF DELHI AT NEW DELHI

(CIVIL ORIGINAL JURISDICTION)

Writ Petition (Civil) No. .................... Of 2010


PUBLIC INTEREST LITIGATION

A WRIT PETITION IN PUBLIC INTEREST UNDER ARTICLE 226 OF THE CONSTITUTION


OF INDIA HIGHLIGHTING HOW AIR INDIA WAS DRIVEN INTO HUGE LOSSES AND DEBTS
BY THE CIVIL AVIATION MINISTRY THROUGH UNNECESSARY PURCHASE OF LARGE
NUMBER OF AIRCRAFT AND THROUGH DELIBERATE LOSS OF MARKET SHARE. THIS HAS
BEEN DONE AT THE BEHEST OF AIRCRAFT MANUFACTURERS, AND PRIVATE & FOREIGN
AIRLINES. THIS PETITION SEEKS A CRIMINAL INVESTIGATION INTO THE ROLE OF CIVIL
AVIATION MINISTER, SENIOR OFFICIALS OF CIVIL AVIATION MINISTRY AND OF AIR
INDIA.

MEMO OF PARTIES

IN THE MATTER OF:

CENTRE FOR PUBLIC INTEREST LITIGATION


THROUGH ITS GENERAL SECRETARY,
43, LAWYER’S CHAMBERS
SUPREME COURT OF INDIA
NEW DELHI-110001 …THE PETITIONER

VERSUS

THE UNION OF INDIA


THROUGH ITS SECRETARY
MINISTRY OF CIVIL AVIATION
RAJIV GANDHI BHAVAN, SAFDARJUNG AIRPORT
NEW DELHI-110003 …RESPONDENT NO. 1

NATIONAL AVIATION CORPORATION OF INDIA LIMITED


THROUGH ITS CHAIRPERSON
AIR INDIA BUILDING, NARIMAN POINT
MUMBAI-400021 …RESPONDENT NO. 2

CENTRAL VIGILANCE COMMISSION


THROUGH ITS SECRETARY
SATARKATA BHAWAN, GPO COMPLEX
INA, NEW DELHI RESPONDENT NO. 3
COMPTROLLER AND AUDITOR GENERAL OF INDIA
THROUGH ITS SECRETARY
POCKET-9, DEEN DAYAL UPADHYAY MARG
NEW DELHI RESPONDENT NO. 4

CENTRAL BUREAU OF INVESTIGATION


THROUGH ITS DIRECTOR
CGO COMPLEX, LODHI ROAD
NEW DELHI-110003 …RESPONDENT NO. 5

NEW DELHI
DATED:
(PRASHANT BHUSHAN)
ADVOCATE FOR THE PETITIONER
301, NEW LAWYERS CHAMBERS
SUPREME COURT OF INDIA
NEW DELHI-110001
IN THE HIGH COURT OF DELHI AT NEW DELHI
(CIVIL ORIGINAL JURISDICTION)

Writ Petition (Civil) No. .................... Of 2010


PUBLIC INTEREST LITIGATION

IN THE MATTER OF:

CENTRE FOR PUBLIC INTEREST LITIGATION


THROUGH ITS GENERAL SECRETARY,
43, LAWYER’S CHAMBERS
SUPREME COURT OF INDIA
NEW DELHI-110001 …THE PETITIONER

VERSUS

THE UNION OF INDIA


THROUGH ITS SECRETARY
MINISTRY OF CIVIL AVIATION
RAJIV GANDHI BHAVAN, SAFDARJUNG AIRPORT
NEW DELHI-110003 …RESPONDENT NO. 1

NATIONAL AVIATION CORPORATION OF INDIA LIMITED


THROUGH ITS CHAIRPERSON
AIR INDIA BUILDING, NARIMAN POINT
MUMBAI-400021 …RESPONDENT NO. 2

CENTRAL VIGILANCE COMMISSION


THROUGH ITS SECRETARY
SATARKATA BHAWAN, GPO COMPLEX
INA, NEW DELHI RESPONDENT NO. 3

COMPTROLLER AND AUDITOR GENERAL OF INDIA


THROUGH ITS SECRETARY
POCKET-9, DEEN DAYAL UPADHYAY MARG
NEW DELHI RESPONDENT NO. 4

CENTRAL BUREAU OF INVESTIGATION


THROUGH ITS DIRECTOR
CGO COMPLEX, LODHI ROAD
NEW DELHI-110003 …RESPONDENT NO. 5
A WRIT PETITION IN PUBLIC INTEREST UNDER ARTICLE 226 OF THE CONSTITUTION
OF INDIA HIGHLIGHTING HOW AIR INDIA WAS DRIVEN INTO HUGE LOSSES AND DEBTS
BY THE CIVIL AVIATION MINISTRY THROUGH UNNECESSARY PURCHASE OF LARGE
NUMBER OF AIRCRAFT AND THROUGH DELIBERATE LOSS OF MARKET SHARE. THIS HAS
BEEN DONE AT THE BEHEST OF AIRCRAFT MANUFACTURERS, AND PRIVATE & FOREIGN
AIRLINES. THIS PETITION SEEKS AN INVESTIGATION INTO THE ROLE OF CIVIL
AVIATION MINISTER, SENIOR OFFICIALS OF CIVIL AVIATION MINISTRY AND OF AIR
INDIA.

To,

THE HON’BLE CHIEF JUSTICE OF DELHI AND HIS COMPANION JUDGES


OF THE HON’BLE HIGH COURT OF DELHI, AT NEW DELHI

The Humble Petition of the


Petitioner above-named

MOST RESPECTFULLY SHOWETH: -

1) That the petitioner is filing the instant writ

petition in public interest highlighting how

the ministry of civil aviation through its

deliberate and misdirected policies and

actions drove Air India & Indian Airlines

into heavy losses to the tune of

thousands of crores. Now the

Government has bailed-out these airlines

at a huge cost to the exchequer. The

entities that have benefited out of this

affair are the foreign aircraft

manufacturers, private Indian and foreign

airlines. Clearly the policies, which were

made without any application of mind,

appear to have been made on extraneous

considerations. This petition seeks an

investigation into this issue and a halt on

further such policies.


2) This petition also shows how the

Government went in for a huge fleet

expansion program in which purchase

orders for 111 aircraft were given. This

unnecessary expansion was made

without any proper study and without any

transparency. The purchase orders of the

aircrafts were given costing a whopping

Rs. 67,000 crores. Loans were taken

from US and Indian banks to finance the

same and today the airlines are deep in

debt and suffering huge losses. This

petition also shows how aircraft were

taken on lease causing the same result. A

Parliamentary Committee has recently

recommended a probe into the entire fleet

expansion program.

3) Apart from this, through deliberate and

mala fide policies of the government,

major profit making routes and timings

were given to one or two private airlines

causing a huge loss of market share to

the national carriers. Foreign airlines

were given unrestricted entry into India

and major routes were given to them

without taking any reciprocal benefits for

Air India. Despite warning that these

actions would result in heavy loss of

market share to our national carrier, the

civil aviation ministry continued with its


unprecedented reckless actions and

policies.

4) The Civil Aviation Ministry has been

admonished for all these issues recently

by two Parliamentary Committees. Both

Parliamentary Committees consist of a

very large and diverse membership of

Members of Parliament (MPs) cutting

across party lines from both Lok Sabha

and Rajya Sabha. Both the Committees

have discussed the issues in great detail

and submitted their respective reports to

the Parliament. It is in the fitness of things

that, when such a huge loss has been

caused to the public exchequer and

reputation & functioning of India’s two

national carriers have been damaged

irreparably, an investigation be made so

as to fix individual responsibility.

5) This entire sad episode also highlights

the need of an independent regulator for

the civil aviation sector. This regulator

would regulate allotment of routes,

bilaterals, social commitment of private

players, operation of non-viable routes

etc. This has been recommended by the

Parliamentary Committee. India has seen

a huge growth in the airline industry and

many new airlines including low-cost


carriers have come up. It is essential that

this important sector not be micro-

managed by the ministry and like all other

major sectors (like telecom, insurance,

power, pension stock market, banks,

petroleum or market), there must be a

regulator for both airports and airlines.

This petition seeks a direction to the

Government to set-up an independent

regulator for the civil aviation sector as is

recommended by the Parliamentary

Committee. This episode also highlights

the need for a professional and expert

CMD with a background of running

airlines and a new Board of Directors for

NACIL . The top management should not

be packed with officials and other

appointees of the civil aviation ministry.

This petition seeks a direction to that

effect to the Government from this

Hon’ble court as is recommended by the

Parliamentary Committee.

6) As is now widely known and clear, the

merger of Air India and Indian Airlines

was finalized in haste without proper

study and groundwork. Both the

Parliamentary committees have severely

criticized reckless policies of civil aviation

ministry. The merger today is only on

paper and just a common MD has been


appointed, but on the ground there is no

convergence or synergy between the two

airlines. The Parliamentary Committees

have recommended several steps that

need to be taken to complete the merger.

This petition seeks a direction to the

Government to implement the reports of

the Parliamentary Committees to

complete and effectuate the merger in a

time-bound manner.

THE PETITIONER

1) The Petitioner, Centre for Public Interest Litigation, is a registered

society formed for the purpose of taking up causes of grave public

interest and conducting public interest litigation in an organized manner.

Its founder President was the late Shri V.M. Tarkunde and its Executive

Committee consists of several senior advocates including Shri Fali S.

Nariman, Shri Shanti Bhushan, Shri Anil Divan, Shri Rajinder Sachar,

Shri Colin Gonsalves among others. Petitioner No.1 has, in the past,

filed several important petitions in public interest, including the challenge

against the allotment of oil and gas dealerships through the

discretionary quota of the Minister as well as the Oil Selection

Board, the transfer of developed oil fields of Panna & Mukta from the

publicly owned ONGC to Reliance and Enron, the Government’s

decision to disinvest, privatize government owned oil companies without

Parliamentary approval, Government’s inaction in dealing with harmful

chemicals in soft drinks, misconduct and mismanagement by the CEO

of Prasar Bharti, non-appointment of NHRC Chairperson by the

Government, land scam at Kandla Port, wrong-alignment of J&K rail link

and corruption in the Scorpene defence deal. Apart from these,

Petitioner has also filed several other petitions on important issues of


public interest some of which are still pending before this Hon’ble Court

and the Hon’ble Supreme Court of India.

THE RESPONDENTS

1) Respondent No. 1 is the Union of India through its Ministry of Civil

Aviation which has acted arbitrarily and illegally in this matter.

2) Respondent No. 2 is the National Aviation Corporation of India Limited

which was formed after the merger of Air India and Indian Airlines. This

company is deep in debt and is suffering huge losses due to the

deliberate wrong and corrupt practices of the Ministry of Civil Aviation.

3) Respondent No. 3 is the Central Vigilance Commission. It is the apex

statutory body set-up to exercise supervision over the vigilance and anti-

corruption work in various Ministries and Departments of the Central

Government.

4) Respondent No. 4 is the office of Comptroller and Auditor General of

India. It is the apex Constitutional body which audits the accounts of

various ministries, departments, bodies and public sector undertakings

like Air India or Nacil and submits its reports.

5) Respondent No. 5 is the Central Bureau of Investigation which is the

investigating wing of the centre.

THE CASE IN BRIEF

1) Air India and Indian Airliners are our two national carriers. They were

established under the Air Corporations Act, 1953 to provide safe, efficient,

economical and properly coordinated international and domestic air transport

services. Due to the ‘open sky policy’ of the Government since 1990s, civil

aviation sector in India has undergone a remarkable transformation in the last


decade in terms of growth, accessibility and affordability. With the entry of

many private players including low-cost airlines and foreign airlines, intense

competition has largely benefited consumers. Air India and Indian Airlines both

inevitably lost their monopoly and consequently their market share. Since many

years, there was talk of privatization of both these airlines. The ideas for

privatization were dropped when the UPA government took office in 2004 and

Praful Patel became the Civil Aviation Minister. It was, rightly or wrongly, felt by

the Government that the two airlines need to be revived so that they can

compete with the private sector.

Aircraft Acquisition Program

2) Under these circumstances, the Government revived the previously

shelved plans for purchase of aircrafts. Earlier there were proposals for

purchase of a few aircraft but were not acted upon due to them being

financially unviable. Director’s report for 2000-01 clearly states that airline

would only go for leasing aircrafts and not purchase. The relevant page of the

said report is annexed and is marked as Annexure P1. Air India had never

showed a profit of even Rs. 150 crores in any financial year. This is clear from

its 10 year financial statistics of the period 1998-2007 as given in its annual

report. The said statistics are annexed and are marked as Annexure P2. The

annual financial statement of Air India in 2007-08 which shows the loss of 2226

crores as delivery of the planes began is annexed and is marked as Annexure

P3. The loss, as per conservative estimates, for 2008-09 is Rs. 5439 crores

and for 2009-10 is Rs. 7200 crores.

3) Overruling earlier analysis, in 2002 Air India planned a purchase of 17

aircraft. This was the first purchase planned since 1993. A news report on this

is annexed and is marked as Annexure P4. In 2001-02 Air India made a small

profit of Rs. 15 crores. This shows that it did not have the capacity to fund a

purchase of even a single aircraft. This proposal was then modified and Air
India decided to purchase 28 aircrafts, though it was clearly financially

unviable. A news report on this move is annexed and is marked as Annexure

P5. Instead of an earlier proposal, the Ministry ordered the purchase of 111

aircrafts from Boeing (U.S.) and Airbus (Europe) with their cost including

interest payments being pegged at a whopping Rs. 67,000 crores. This was

done at the instance of the Ministry is clear from the Director’s Report 2003-04.

The relevant page of that report is annexed and is marked as Annexure P6.

Such an ambitious purchase order was made without any study of

requirements, without requisite transparency and without proper application of

mind. Such an order can not be made but on extraneous considerations.

4) The Management Discussion for 2004-05 states that Air India had

decided to go in for 68 aircrafts, up from the earlier proposal of 28 aircrafts and

a more than four times jump in expenditure from Rs. 10,000 crores to Rs.

44,000 crores. The said report does not quote any committee recommendation

or any study to justify such an ambitious and clearly financially unviable

proposal. The relevant page of the said report is annexed and is marked as

Annexure P7. After French government (Airbus) complained that parameters

were being altered to favour Boeing (U.S.), Civil Aviation Minister claimed that

his ministry had no role to play in the acquisition program. A copy of the news-

report on this is annexed and is marked as Annexure P8. On 26.04.2005, the

proposal for the said purchase was approved by Air India board which is

dominated by officials of the Ministry. A news report on the same is annexed

and is marked as Annexure P9.

5) Management Discussion report of 2006-07 mentions that 85% of the

cost of the fleet expansion programme was to be met through a loan from US

Exim Bank and the rest 15% from commercial borrowings. The relevant page

of the said report is annexed and is marked as Annexure P10. The first B-737-

800 was delivered in 2006, with the airline taking delivery of 8 airplanes. With

no resources of its own to pay for delivery, the airline borrowed money at

commercial rates from nationalized and foreign banks, and its net secured and
unsecured borrowings increased from Rs 1261 crores to Rs3219 crores, of

which it is thought that the airline had taken an overdraft of Rs 1683 crores to

pay for deliveries (to fund the 15% down payment component). The balance

sheet for 2005-06 is annexed and is marked as Annexure P11. The interest

and depreciation payments for these loans showed up on the balance sheet for

2006-07 as Rs. 985 crores and net losses were Rs. 447 crores. Air India’s

borrowings increased to whopping Rs 7665 crores in 2006-07 and an

additional borrowing of Rs. 4446 was made in the same financial year. The

balance sheet of 2006-07 is annexed and is marked as Annexure P12. In

2007-08, Air India’s borrowings increased to Rs 18413 crores and interest

payments to Rs 2890 crores. The losses increased to Rs. 5600 crores. The

balance sheet for 2007-08 is annexed and is marked as Annexure P13. NACIL

blamed the global economic slow-down for these losses. A copy of a news

report on this is annexed and is marked as Annexure P14.

6) Immediately after the payments for the above orders were factored in,

Air India and Indian Airlines started showing huge losses that today exceed

several thousand crore rupees annually. Now the Government, feeling it has no

option left, has recently bailed out the two airlines at a huge cost to the public

exchequer. A copy of a news report on this is annexed and is marked as

Annexure P15. Today, situation is so bad that Air India is on the verge of

losing its national carrier status and shutting down its international operations.

News report dated March 23, 2010 is annexed and is marked as Annexure

P16. Centre for Asia Pacific Aviation, leading provider of aviation analysis, has

said that Air India would require a whopping $ 1 Billion bailout from the

exchequer to stand on its feet. If this is acceded to by the Government, it would

have devastating results on the country’s finances. A news report on this is

annexed and is marked as Annexure P17. Therefore it is proper that a criminal

investigation be conducted to establish the role of civil aviation minister, senior

officials of the ministry and top management of NACIL/Air India in the massive

aircraft purchase programme which seemed to have only benefitted 2 foreign

aircraft manufacturers.
7) After the acquisition started in 2005, a major policy decision was taken

in 2007 to merge Air India and Indian Airlines. One of the major reasons for the

merger was that long range aircraft available with Air India and short and

medium range aircraft available with Indian Airlines can be used by the other

airline. This would have been enough to meet the needs for aircraft. Some

more could have been ordered as per the financial capacity of the airline. But

to revise proposals (which were previously shelved as being commercially

unviable) of purchase of a few aircrafts to 111 aircrafts without any study, at a

time when the said merger was being contemplated shows a complete non-

application of mind. Planning Commission has said that the airline did not have

a business plan when it made the purchase orders. Due to this, now Air India is

contemplating cancelling a few orders. A news report on this is annexed and is

marked as Annexure P18.

8) The Parliamentary Standing Committee on Transport, Tourism and

Culture has slammed the government on its aircraft acquisition program. The

said committee comprising of 10 Rajya Sabha Members and 21 Lok Sabha

Members cutting across party-lines in a detailed and unanimous report dated

21.01.2010 has made the following observations:

(i) “Aircraft Acquisition Programmes of the erstwhile Air India

and Indian Airlines were finalized in haste.”

(ii) “The entire aircraft acquisition programme lacked required

transparency.”

(iii) “Reasons for going ahead with huge purchases by the

Ministry of Civil Aviation despite Air India and Indian Airlines not

having the capacity to support it, remains unknown to the

Committee.”

(iv) “It, therefore, recommends that this aspect needs to be

further probed to fix responsibility for taking such an ambitious

decision that has become big financial liability.”


The report of the said committee is annexed and is marked as Annexure P19.

9) According to media reports, the Central Vigilance Commission has

ordered an inquiry into Civil Aviation Ministry and Air India’s decision to

purchase 111 aircraft at Rs. 67,000 crore (including interest payments and

depreciation) in 2005 and then persist with it despite its poor financial

condition, falling passenger share and the global recession. A copy of the news

report is annexed and is marked as Annexure P20.

10) The Parliamentary Committee on Public Undertakings comprising of 15

Lok Sabha Members and 7 Rajya Sabha Members have given a detailed and

unanimous report on the financial mess our national carrier is in. The said

report blames the “whimsical” policies and actions of the civil aviation ministry

for the heavy losses and mounting debt. It observes:

(i) “The Committee is skeptical of NACIL’s request for Rs.

10,000 crore capital in-fusion from the government towards fleet

acquisition.”

(ii) “The Committee notes that a lot of idle capacity is being

allowed to exist in the company despite ambitious acquisition

orders.”

The report of the said committee is annexed and is marked as Annexure P21.

11) Public-interest weekly Tehelka has slammed the Civil Aviation Minister

for wanting to “sink more money” into Air India. Copy of its report is annexed

and is marked as Annexure P22. An article written by Ravindra Kumar, Editor

and Managing Director, of the daily ‘The Statesman’, which is known for its

credibility and balance, has slammed the Prime Minister for being a mute

spectator to this “willful, whimsical destruction of this national institution”. In this

article that appeared in The Statesman on 30 January, he says:

“Point is that virtually all charges made by the parliamentary

committee against the Ministry of Civil Aviation have been


highlighted in the columns of this newspaper over the past five

years, a fact readers would be aware of. In other words, the

committee was not placing some startling new facts before the

Rajya Sabha and the government; had the Prime Minister

bothered to keep his eyes and ears open, he would have known

that the nation’s interests, and especially the national carriers,

were being run systematically into the ground.

We must concede that Mr Patel may well be beyond shame, and

perhaps redemption. But what about Dr Manmohan Singh? How

can a Prime Minister, who wears integrity on his sleeve, not feel

a sense of outrage at the willful, whimsical destruction of a

national institution? Or assume that we will not feel outraged at

the scandalous goings-on that a parliamentary committee has

now laid bare?”

A copy of the said article is annexed and is marked as Annexure P23.

Lease of Aircrafts

12) Apart from the purchase of aircrafts, a large number of aircrafts were

taken on lease by Air India. NACIL (company formed after the merger of Air

India and Indian Airlines) adopted standard lease agreement drafts for taking

acquiring aircraft on lease which did not have an early termination clause. In

view of very low load because of large scale aircraft acquisition, several flights,

especially overseas flights, were running almost empty and at huge loss.

NACIL could not even terminate the lease agreements since in that case

NACIL would have to pay all costs and lease rental differentials.

13) The Parliamentary Committee on Transport in its analysis concluded:

(i) “A decision to go for…lease of aircrafts was taken to

increase market share without due considerations

regarding proper route study and marketing or pricing

strategy.
(ii) The Committee observes that aircrafts were dry/wet

leased even while aircrafts acquisition programme was

going on. The Committee feels that aggressiveness shown

in leasing of aircrafts has now turned out to be an unviable

proposition. It raises genuine doubts about the

Government’s approach towards the entire issue.

(iii) The Committee is of the opinion that it has led NACIL into

a morass from which it is very difficult to come out.

(iv) The Committee could not comprehend why the NACIL

Management and the Ministry of Civil Aviation went ahead

after 2005 with the expensive proposition of leasing of

aircrafts that too without any exit clause. The Committee

also notes that even after the new aircraft delivery to

NACIL, the company continued to lease aircraft or

renewed the leases on some pretext or the other, which

caused huge loss to the company at the time of recession,

low seat factor and capacity underutilization. All such

decisions taken by the Management and the Ministry of

Civil Aviation had ultimately resulted in big financial loss to

the company.

(v) The Committee recommends that all the lease

agreements maybe reviewed and appropriate action may

be taken in cases where agreements were not based on

sound business prudence.”

14) The petitioner, under these circumstances, humbly submits that an

independent investigation is required to unearth the entire chain of events that

have resulted in such a huge financial loss to the country. The decisions made

by Civil Aviation Ministry have been made without application of mind and its

persistence with the decision despite spiraling losses and debt needs to be

probed.
Loss of Routes and Market Share

15) Routes are allocated by the Civil Aviation Ministry on the petitions of

airlines. On the directions of the Civil Aviation Ministry, Air India withdrew its

services from many profit making routes. Private operators were the biggest

beneficiaries of this decision as they took all those routes and a bigger market

share. Air India, which also has a social responsibility to ply at even non-viable

and non-profit making routes, was the biggest loser as it lost all its profit

making routes to private airlines. Air India also gave away its routes to private

and foreign operators without taking any reciprocal benefits.

16) International routes like Kolkata-Bangkok, Kolkata-Dhaka, Doha-Cochin,

Cochin-Kuwait and domestic Ahmadabad-Bangalore, Ahmadabad-Kolkata,

Ahmadabad-Jaipur, Ahmadabad-Delhi, Bangalore-Bhubaneshwar,

Bhubaneswar-Kolkata, Mumbai-Vadodra, Hyderabad-Nagpur, Mumbai-Patna,

Mumbai-Pune, Pune-Goa are those routes from where Air India has withdrawn

its services. On all these routes private airlines, mainly Jet Airways and

Kingfisher Airlines, are operating and presumably making good profits. In other

lucrative routes like Mumbai-Dubai or Mumbai-Ahmedabad, Air India reduced

its flights and gave its opponents a major market-share.

17) The Parliamentary Committee on Transport has noted and

recommended:

(i) “Air India started to withdraw their services from the

lucrative and profit earning routes in the name of route

rationalization and simultaneously opened door for private

operators.

(ii) Private operators were favoured in the route dispersal

guidelines and more and more bilaterals were handed over to the

private airlines on a platter.


(iii) The Committee therefore recommends that the decision to

open the highly lucrative international air markets to/from India

may be probed by a suitable agency and all those bilaterals must

be reconsidered and reviewed and responsibility may be fixed for

giving away the national rights.

(iv) The Committee strongly recommends that an inquiry

maybe conducted to find out why such a large number of bilateral

were granted to foreign players.

(v) Committee notes that services are being withdrawn from

lucrative sectors by NACIL paving the way for introduction of

services by the private operators in the same sector. The

Committee fails to understand the logic behind this move and

feels that this move will definitely fill the coffers of private

operators.

(vi) Committee apprehends that there appears to be a nexus

operating…to favour the private operators.”

18) The Parliamentary Committee on Public Undertakings has

recommended:

“The Committee recommends that the Ministry of Civil Aviation

should conduct a review of the entire route and slot allocations,

both in the domestic and international sectors, and effect

necessary changes to ensure that NACIL is neither put at any

disadvantage.”

Change of name of ‘Indian Airlines’ to ‘Indian’

19) The brand name of our domestic carrier ‘Indian Airlines’ was in

December 2005, for a brief period, changed to ‘Indian’. Not only the choice of

the name betrays a complete non-application of mind, the said was done at a

huge cost. Moreover, this was done while the proposal for the merger was
being finalized. Apart from the expenditure involved, it also caused a lot of

confusion and loss of brand value.

20) The Parliamentary Committee on Transport has noted:

“The Government rechristened its brand as ‘Indian’ and started to

repaint its aircrafts. After merger into NACIL, the brand name

‘Indian’ has been replaced with the brand name ‘Air India.

Needless to say, these costs have added to the operating cost of

NACIL. The Committee feels that this branding and re-branding

exercises were wasteful expenditures.”

21) The Parliamentary Committee on Public Undertakings has noted:

“Indian Airlines, which had established unparalleled brand recall

value across the country, was rebranded and ‘Indian’ suddenly

appeared in the skies without any convincing rationale drawing

humungous costs from the public exchequer. …the importance of

brand equity... was frittered away with this whimsical decision.”

22) All of the above shows that the current financial problems have been

created due the policies of the civil aviation ministry. To escape the blame, the

ministry has constantly been blaming the cost of the salaries of the employees,

high fuel costs and the economic downturn. Actually, major cause for the high

losses and debts are the Government policies. Even if Air India does not pay a

single rupee to all of its employees, it would still make Rs. 2500 crores losses

per year. Parliamentary Committee on Transport has castigated the Ministry for

these diversionary tactics:

“The Committee is of the firm view that the turn around of NACIL

is not possible by shifting the burden of the crisis on the

shoulders of the employees and/or blaming them for the ills of the

company. The Committee firmly believes that the one and only
way of overcoming the problem is to change the often irrational

and misplaced policy decisions of the Government.”

The Parliamentary Committee on Public Undertakings has also observed to the

same effect:

“The Committee takes strong objection to the Ministry and NACIL

camouflaging all their failures on the pretext of the rising fuel

prices and the world recession.”

Despite these admonitions, civil aviation minister has continued to blame fuel

prices and global economic slow-down for the mess in Air India that his policies

has created. His recent interview in Tehelka dated 03.04.2010 is annexed and

is marked as Annexure P24.

Need for an independent regulator

23) This entire sad episode also highlights the need of an independent

regulator for the civil aviation sector. This regulator, which is now sorely

missed, would regulate allotment of routes, bilaterals, social commitment of

private players, operation of non-viable routes etc. This has been

recommended by the Parliamentary Committee. India has seen a huge growth

in the airline industry and many new airlines including low-cost carriers have

come up. It is essential that this important sector not be micro-managed by the

ministry and like all other major sectors (like telecom, insurance, power,

pension stock market, banks, petroleum or market), there must be a regulator

for both airports and airlines. Petitioner humbly submits that the Government

should be directed to set-up an independent regulator for the civil aviation

sector as is recommended by the Parliamentary Committee.

24) Parliamentary Committee on Transport has noted & recommended:

“The Committee notes that presently there is no independent

regulatory authority to regulate the allotment of routes, bilaterals,

social commitment of private players, operation of non-viable


routes etc. The Committee, therefore, recommends that the

Government may consider formation of an independent

regulatory authority to regulate the above subjects since the civil

aviation sector in India has grown manifold in recent years.”

Incomplete Merger

25) Merger of erstwhile Air India and Indian Airlines, in principal, might not

be a bad idea as the two air lines can leverage each others assets and need

not duplicate many administrative costs and overheads. The merger was to be

completed by 2009. But it is commonly known and has been noted by both

Parliamentary Committees that the said merger only exists on paper. Apart

from having a common CMD, there is nothing on ground which could show that

the two airlines have merged their operations and services. The merger

remains incomplete.

26) Parliamentary Committee on Public Undertakings has observed:

“The Committee is disconcerted to note that having imposed the

merger of two carriers, the Ministry has shown little initiative in

monitoring the progress of the charted merger plan... The utter

lack of sincerity on the part of the Ministry… is manifest in their

failure to ensure some continuity of leadership to the company.”

Parliamentary Committee on Transport has noted:

“Any further delay in merger is not going to do any favour for the

ailing public carrier. Although more than two years have lapsed,

the merger is neither visible in the air nor on the ground.”

27) The Parliamentary Committees have given a series of recommendations

as to how the said merger can be effectuated which inter alia include

consistency of plans, proper leadership, establishment of uniform code, cross

utilization of resources, IT augmentation, customer services, sales &

marketing, finance, ground handling, cargo and training of staff, etc. These
recommendations must be implemented without further delay and in a time

bound manner under the supervision of this Hon’ble court.

Board of Directors & top management of NACIL

28) The central government appoints Director on the Board of the company.

Directors were appointed for short periods and some even for a few days.

Many officers of the civil aviation ministry without any real expertise were

appointed to the board. Also, in a period of 2 years, NACIL had 4 CMDs which

is against all norms of corporate governance.

Parliamentary Committee on Transport has recommended:

“The Committee recommends that the practice of filling the Board

of Directors mainly with the officers from the Ministry of Civil

Aviation should be discouraged.

Independent Directors with professional experience and

expertise may be inducted to the Board. Professional Board &

Directors and a committed CMD is the need of the hour to run the

NACIL in an efficient way.

NACIL should be run by professionals and not be generalists.”

29) The Petitioner has not filed any other writ, complaint, suit or claim in any

manner regarding the matter of dispute. The Petitioner has no other better

remedy available.

30) The Petitioner seeks liberty from this Hon’ble Court to produce other

documents and records as and when required in the course of the

proceedings.

GROUNDS

A. That the actions of the Government in ordering the purchase of a large

number of expensive aircrafts, without any study, knowing fully well that
Air India is in no position to pay for them, shows a complete non-

application of mind and is arbitrary and mala fide.

B. That such action of the Government has put Air India deep in debt and

has made it incur huge losses. Making good those losses and debts at

the cost of the exchequer shifts the burden to the tax payers. Such

arbitrary and illegal policies have caused a huge loss to the country.

C. That the deliberate policies of the Government, through which it entered

into various lease agreements, bilaterals, route rationalizations, route

agreements without taking reciprocal benefits for Air India, have

benefited a few private parties but caused huge losses to the national

carriers. Such policies are illegal, arbitrary and mala fide.

PRAYERS

In view of the facts & circumstances stated above, it is most respectfully prayed

that this Hon’ble Court in public interest may be pleased to: -

a. Direct an SIT/CBI investigation into-

1) the unnecessary purchase of a large number of aircrafts and

deliberate loss of market share of NACIL at the behest of a few

private & foreign airlines and aircraft manufacturers.

2) unearthing the role of civil aviation minister and senior officers of

the civil aviation ministry and top management of NACIL in this

purchase.

3) all the aircraft lease agreements since 2004 with appropriate

action to be taken in cases where agreements were not based on

sound business prudence.”

4) the decision to open the highly lucrative international air markets

to/from India with responsibility to be fixed on an individual/groups

of individuals for giving away the national rights. The inquiry should
be conducted to find out why such a large number of bilateral were

granted to foreign players,

5) the withdrawal from lucrative sectors by NACIL paving the way for

introduction of services by the private operators in the same sector.

6) The existence of a nexus between Ministry officials and Private

industry operating…to favour the private operators.”

7) to unearth the entire chain of events that have resulted in such a

huge financial loss to the country

b. Direct the Government and NACIL to cancel purchase orders of the

aircrafts which have not yet been delivered.

c. Direct the Government to re-examine and cancel the routes, bilaterals,

lease agreements and other agreements which have caused a huge

loss to NACIL.

d. Direct the Government to set-up a regulator for the civil aviation sector

as is recommended by the Parliamentary Committee.

e. Direct the Government to henceforth appoint only professionals and

experts with experience in running large airlines as CMD and Directors

on the Board of NACIL.

f. Direct the Government to take steps to effectuate and complete the

merger of Air India and Indian Airlines as is recommended by the two

Parliamentary Committees in a time-bound manner under the

supervision of this Hon’ble court.

g. Issue or pass any writ, direction or order, which this Hon’ble court may

deem fit and proper under the facts and circumstances of the case.
Petitioner
Through

New Delhi Prashant Bhushan


Dated: April , 2010 (Advocate for the Petitioner)

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