New Delhi, March 5 (IANS): The Delhi High Court Wednesday issued notice to the central government and Malaysia-based AirAsia on a plea by the Federation of Indian Airlines (FIA) seeking quashing of the approval granted to it to start flight operations in India.

A division bench of Acting Chief Justice B.D. Ahmed and Justice Siddharth Mridul also issued notice to the Foreign Investment Promotion Board (FIPB) and sought response by March 12.

The government March 26 last year had approved AirAsia's proposal to set up a new airline in partnership with the Tata Group and the Arun Bhatia-promoted Telestra Tradeplace to create a low-cost airline in India.

On Feb 21, the director general of civil aviation (DGCA) granted permission to AirAsia to start its air operations.

The FIA approached the court opposing the permission granted to AirAsia to start flight operations in India, and asked the court to restrain the company from commencing business.

The high court also directed the central government and AirAsia to file its response on the contention raised by Bharatiya Janata Party leader Subramanian Swamy that the authorities failed to examine the question of "substantial ownership" and "effective control", both of which should be in Indian hands.

The court had earlier refused to suspend the operationalisation of the $30 million deal.

Swamy claimed that AirAsia had not shown to the FIPB that the airline will essentially be controlled by Indians.

His plea had opposed clearance to the deal on the ground that, according to government policy, FDI up to 49 percent is allowed in existing airlines which are already in operation and not to new or proposed joint ventures.

AirAsia India, to be based in Chennai, will see the Malaysian airline holding a 49 percent stake.