India’s top court will hear on March 2 a suit that seeks to declare Vedanta Resources Plc’s $8.67 billion acquisition of oil explorer Cairn India Ltd. illegal.
The petition, filed in the Supreme Court today by lawyer Prashant Bhushan on behalf of Bangalore resident Arun Kumar Agrawal, wants the court to order state-run Oil & Natural Gas Corp. to buy controlling stake in Cairn India. The suit also asked the court to order an investigation into why ONGC didn’t buy the shares.
Cairn India said in an e-mail it has no comments to offer at this stage. ONGC, India’s biggest energy exploration company, said in September its decision not to make a competing bid for Cairn India was based on legal and commercial considerations.
Vedanta, controlled by billionaire Anil Agarwal, is a metals and mining company with no previous experience in oil and gas projects. It completed the purchase of Cairn India, operator of the nation’s biggest onshore oil deposit, in December after the government approved the deal in June.
Cairn India, previously a unit of U.K. explorer Cairn Energy Plc, fell 0.9 percent to 377.95 rupees at close in Mumbai. ONGC declined 1.2 percent to 281.05 rupees. The benchmark Sensitive Index dropped 2.7 percent.
Cairn India agreed to make royalty payments recoverable from oil sales. ONGC, Cairn India’s partner, owns 30 percent of the deposit in Rajasthan state and paid royalty for the entire output.
Vedanta, based in London, said Feb. 25 the group’s 58.9 percent holding in Cairn India will be transferred to Sesa Sterlite, a company that will be formed by combining units Sesa Goa Ltd. and Sterlite Industries (India) Ltd.