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MHA wants ED to take over PIA assets

9 yrs after Pak airline bought office space in Delhi, ministry wants action on ‘protocol of reciprocity’.

According to the May 1977 agreement between PIA and RBI, the Pakistan airline would require prior permission of the RBI to acquire immovable property. According to the May 1977 agreement between PIA and RBI, the Pakistan airline would require prior permission of the RBI to acquire immovable property.

The Ministry of Home Affairs wants the Enforcement Directorate to take possession of the properties bought by the Pakistan International Airlines (PIA) nine years ago in Delhi’s upmarket Connaught Place, saying it “needs to be looked from the angle of reciprocity”.

On May 26, the day Pakistan Prime Minister Nawaz Sharif attended Narendra Modi’s swearing-in ceremony in New Delhi, the home ministry wrote to the Department of Economic Affairs (DEA) under Finance Ministry seeking action against PIA. It reasoned that Pakistan through “nefarious tactics” forced India’s national air carrier to stop its operation in Pakistan. In its letter, the ministry said, “Proposal of acquisition of property by PIA, 102, Kailash Building, 26 KG Marg, New Delhi, needs to be looked from the angle of reciprocity.

Pakistan through nefarious tactics put Indian Airlines in a condition to stop flights to Pakistan. As such, till such time that IA/AI (Indian Airlines/ Air India) starts operating flights to Pakistan and requires to purchase property in Pakistan, the proposal may not be allowed on strict protocol of reciprocity.”

A spokesperson for the Pakistan High Commission in Delhi told The Indian Express over the phone, “Comment is uncalled for as we are not aware of such move. We have checked with PIA, these properties were bought few years ago and they are also not aware of any such move.” Email sent to PIA manager in New Delhi remained unanswered.

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According to the May 1977 agreement between PIA and RBI, the Pakistan airline would require prior permission of the RBI to acquire immovable property. The Foreign Exchange Management Act also requires companies registered in Pakistan to take prior permission of RBI to purchase immovable assets. In this case, PIA informed RBI after purchase of the property in June 2005

Nine years since RBI first wrote to the Finance Ministry, intimating about the PIA acquisition, the DEA on June 11 this year informed RBI that “the proposal has been examined and rejection of the Government of India is hereby conveyed to the proposal of M/s Pakistan International Airlines for acquisition of immovable property at New Delhi, India”.

PIA had bought four flats in Kailash Building in Kasturba Gandhi Marg totaling 2,576 square feet in 2005 for Rs 2.26 crore from the “surplus funds of Pakistan International Airlines, New Delhi”, according to the declaration the PIA submitted with the RBI in 2005. In the declaration, PIA had stated that the property was bought for its offices.

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PIA used to operate out of the ground floor of the same building, which has now shifted out to a nearby building. At present the four flats owned by PIA is with ONGC Videsh Ltd and Siddho Mal Paper Conversion Company Pvt Ltd. A senior ONGC official said the office in Kailash Building operates out of rented premises but could not confirm the identity of the owners of the building, as the payment is made to buildings management.

In July, DEA informed the MHA that rejection of proposal has been conveyed to RBI, and both RBI and ED has been asked to take action against PIA for forex violation.

First published on: 25-07-2014 at 01:44:10 am
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