New Delhi: The Centre submitted before the Delhi High Court that approval of Parliament is not mandatory for amalgamation of public sector units.
This was stated by the Centre in response to a petition challenging the merger between state-run airlines Air India and Indian Airlines into a new entity-- National Aviation Company of India Ltd (NACIL).
While defending the merger, Additional Solicitor General P P Malhotra said that the merger is valid and legal as section 620 of the Company Act empowers the government to exempt any PSU from provisions of the Act (from taking approval of Parliament).
Challenging the merger, the Air India Aircraft Engineers Association and others had contended that the merger of Indian Airlines and Air India stands on different footing from other mergers. These companies have been incorporated by statute and they cannot be merged without amending the law.
The Association also referred the Supreme Court judgement in HPCL and BPCL merger case in which it was held that companies incorporated by a statute of Parliament cannot be merged without approval of the legislative body.
The merger of Air India and Indian Airlines was sanctioned by the Ministry of Corporate Affairs on 22 August last year. The move was aimed at bringing about more efficiency and better utilisation of resources.