I thought you would hv already known this, but will explain. Star alliance's highest decision making body is the CEO board where each member airline CEO gets a vote. It was not the star alliance CEO but this board that booted out air India a year back.
Yes, I know this.
Like the article says, There is a letter that air India/Ajit Singh got from *A last week where they(the CEO board) could not decide still on air India membership. So "they practically said no". Maybe they expect AI to withdraw their application rather than rejecting them.
I understand that they have "practically said no" - but is that a formal rejection? I understand that if AI is formally rejected, then they might be entitled to getting their joining fees (60+ crores) back, etc. etc. In contrast, if they withdraw, they are forfeiting all of that. And, as long as they don't withdraw, their application is still "pending," so 9W cannot join.
*A may want AI to withdraw, but why would AI want to play along?