Indian, AI merger: SC orders interim stay on proceedings

In its petition, the company also sought consolidation of the cases pending before various high courts, challenging the merger of the two state carriers. Following the petition, the Bench comprising Justices S B Sinha and H S Bedi issued notice to the Ministry of Corporate Affairs and Registrar of Companies. Notices have also been served to the Indian Commercial Pilots Association, Indian Airlines Officers Association, Air Corporation Employees Union, Airlines Radio Officers and Flight Operation Officers Association, Air India and Indian besides other respondents.

National Aviation Company of India Ltd had sought transfer of the petition from the Bombay High Court to the Delhi High Court so as “to avoid the multiplicity of proceeding and possible conflict of decisions”.

The petitioners before the high courts had challenged the constitutional validity of Section 620 of the Companies Act and issuance of Notification dated February 2, 1978, which conferred powers on the Centre to usurp judicial functions assigned to the High Court and exempted merger of Government companies from judicial scrutiny. The matter is scheduled to come up for hearing on October 30. The notification had also taken away the right to appeal against an order allowing any such merger.

While the three Government companies — Air India, Indian Airlines and National Aviation — had passed their board resolutions in May 2007, approving the scheme of merger, the Ministry had approved the merger in August 22 this year.