SC open to auctioning Aircel’s 2G spectrum license if summons continue to be evaded

Supreme Court said in the event of continued non-appearance, it may consider an auction of the 2G spectrum allotted to Aircel, keeping the base price at Rs20,000 crore


Troubles for Aircel began on 6 January with the apex court threatening to cancel its 2G spectrum license because of evasion of summons by T. Ananda Krishnan and others.
Troubles for Aircel began on 6 January with the apex court threatening to cancel its 2G spectrum license because of evasion of summons by T. Ananda Krishnan and others.

New Delhi: The Supreme Court said on Friday that it may consider the auction of 2G spectrum owned by Aircel Ltd to pay bank debt of Rs20,000 crore if its Malaysian owners, summoned to appear before the Indian courts, fail to turn up.

Aircel is 74% owned by Malaysia’s Maxis Communications Bhd. A special Central Bureau of Investigation (CBI) court has ordered its owner T. Ananda Krishnan and others to appear before the CBI, but they haven’t complied.

A bench headed by Chief Justice of India T. S Khehar said that in the event of their continued non-appearance, it may consider an auction of the 2G spectrum allotted to Aircel in 2006, keeping the base price at Rs20,000 crore—the amount owed to banks.

If the court were to indeed do so, it would hinder Aircel’s proposed merger with Reliance Communications Ltd (R-Com) under which 50% of Aircel’s equity would be transferred to R-Com.

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“We are going to make sure that those absconding and evading summons honour them or there will be consequences.They must come and answer to the court and in the failure of non-appearance, no objection may be raised by them regarding the resulting monetary loss.” justice Khehar remarked.

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.

The Supreme 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 Bharti Airtel Ltd and R-Com for sharing spectrum.

Troubles for Aircel began on 6 January with the apex court threatening to cancel its 2G spectrum license because of evasion of summons by Krishnan and others. It restrained Aircel from selling and trading 2G spectrum, casting a shadow on the proposed merger between the company and R-Com.

Abhishek Manu Singhvi, counsel for Aircel, told the court that the proposed merger would not involve any money going out since it was a merger of operations.

“There will be no buying or selling. The deal will involve R-Com’s wireless division to merge with Aircel,” Singhvi added.

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.

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The Supreme Court’s observation came a day after a special CBI court passed an order exonerating former telecom minister Dayanidhi Maran, his brother Kalanithi and others accused in the Aircel-Maxis case brought by both the CBI and the Enforcement Directorate (ED). Cases against Ananda Krishnan and others are being separately heard before the special CBI court.

A challenge to the discharge order was brought by special public prosecutor Anand Grover, who said order had been wrongly passed without furnishing of bail bonds by the suspects. He also said on behalf of the ED that properties attached under the order should not be released.

The court, however, refused to consider such challenge at this stage, pointing to several defects in the petition and asked for a fresh petition to be filed by Saturday.

The case will be heard next on 10 February.

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