SC threatens to cancel Aircel’s 2G spectrum licence

SC says it will cancel Aircel’s 2G spectrum licence if Maxis Group’s owner T. Ananda Krishnan continues to evade appearance before Indian courts


The Centre for Public Interest Litigation had sought to restrain Aircel from selling spectrum. Photo: Mint
The Centre for Public Interest Litigation had sought to restrain Aircel from selling spectrum. Photo: Mint

New Delhi: The Supreme Court on Friday restrained Aircel Ltd from selling and trading 2G spectrum allotted to it in 2006, casting a shadow on the proposed merger between the company and Anil Ambani’s Reliance Communications Ltd (R-Com).

Maxis Group, owned by Malaysian businessman T. Ananda Krishnan, has a 74% stake in Aircel. A special Central Bureau of Investigation (CBI) court has ordered Krishnan to appear before it, but he hasn’t complied. The CBI has set a 27 January deadline for him to appear before it.

A bench headed by Chief Justice J.S. Khehar said that it may cancel Aircel’s use of the 2G licences it acquired in 2006 if Krishnan continued to avoid appearing before Indian courts.

“If he is going to use an asset belonging to this country, he may be anywhere in the world but must appear before us,” the court said in an oral observation.

Maxis acquired the 74% stake in 2006 from Aircel owner C. Sivasankaran. The CBI has alleged that Sivasankaran sold the stake under duress from then telecom minister Dayanidhi Maran, who stalled approvals it needed, and that Maxis, in return, invested in his brother Kalanithi Maran’s Sun Direct, the direct-to-home TV arm of his Sun TV Network Ltd.

“We propose to restrain earning of any revenue, by using the 2G spectrum licences, which were originally granted to M/s. Aircel Telecommunications,” the Supreme Court court said in its order.

The court will hear the matter next on 3 February.

R-Com and Aircel have proposed merging their businesses to create India’s third-largest mobile-phone services provider by subscribers, behind Bharti Airtel Ltd and Vodafone India Ltd. Both R-Com and Maxis Communications will hold 50% each in the merged entity and have equal representation on the board and committees.

R-Com has claimed that the merged entity will have the second largest spectrum portfolio among all telecom operators in the country in bands such as 850 megahertz (MHz), 900MHz, 1,800MHz and 2,100MHz.

R-Com and Aircel could not be reached for comment on Friday.

An expert said Friday’s court order may throw the merger into uncertainty.

“This would be of some concern to the R-Com-Aircel merger,” said Mahesh Uppal, a director at telecom consultancy ComFirst. “It is something that needs to be resolved before the merger takes place.”

The Supreme Court also directed the department of telecommunications to look into whether Aircel’s 2006 licences can be transferred to some other service provider if the court cancels the licences.

The court added in its order that in case it cancels the licences, the accused cannot complain about the resulting monetary loss.

“Our proposal would obviously entail adverse consequences to the subscribers. We do not wish our order to have any such impact,” it said.

In September 2016, the CBI court issued open bailable warrants against Krishnan, a Malaysian citizen. Interpol is currently in the process of serving summons to Malaysians accused in the case.

On Friday, the apex court was hearing a plea filed by the Centre for Public Interest Litigation (CPIL), a non-profit organization led by advocate Prashant Bhushan. CPIL had sought to restrain Aircel from trading spectrum granted to it in 2006. Aircel concluded two deals in 2016 with Airtel and R-Com for sharing spectrum.

Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.

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