New Delhi: CBI was on Monday directed by a Delhi court to file Law ministry report which said that a firm should have more than 10 percent stakes in another for being termed an associate, a plea taken by the 2G scam accused Reliance Telecom and Swan Telecom. "No single company/legal person either directly, or through its associates, shall have substantial equity holding in more than one licensee company in the same service area for the Access Services namely: Basic, Cellular and the UAS. (Agencies)
"It is ordered that CBI would place a copy of the report received by it from Ministry of Law and Justice through Department of Telecommunication (DoT) on record on September 21, the next date of hearing," Special CBI Judge O P Saini said.
Reliance Telecom Ltd (RTL) and Swan Telecom Private Ltd (STPL), an alleged beneficiary of the scam, have been taking the defence that they were not "associate" firms as RTL's stake in STPL was below 10 percent, as mandated under the guidelines for the Unified Access Service (UAS) Licenses.
Essar Telecom, which allegedly created Loop Telecom as its front company to get licenses, has taken the same plea.
'Substantial equity' herein will mean 'an equity of 10 percent or more'. A promoter company/legal person cannot have stakes in more than one licensee company for the same service area," the UASL guidelines said.
CBI, on the other hand, has been alleging that STPL was an associate firm of RTL created to circumvent the then guidelines of DoT which debarred existing CDMA players from venturing into GSM segment.
RTL later passed on the control of STPL to promoter and co-accused Shahid Usman Balwa after the DoT allowed it to avail the facility of dual technology, the agency said. Law Secretary D R Meena, in his report to the DoT, had said the term "associate" could be determined only by applying the "share-holding" test between telecom firms.
"It is a common mistake to confuse a mere "association" with a definition of an "associate company". Companies may have common interests, common business strategies, financial dealings, business pacts and understandings. It is common knowledge that in the telecom sector, several companies enter into business arrangements for technical support and strategies like sharing of towers.
"To that extent, they certainly have an "association", but by no means they can be termed as being "associates" of one another, on that ground. The true test, therefore, is to apply the shareholding test," the report said.
However, the names of accused telecom firms did not figure in the report of the Law ministry.
The judge said though CBI was justified in opposing the plea of the accused, the court was asking for the report as the investigators have left the issue to its discretion.
Initially, CBI, during the arguments, took the plea that it cannot be forced to bring on record the "unsolicited" opinion of Law ministry as it had no relation with its probe and filing of the charge sheet in the case.
Later, CBI took a u-turn saying "we leave it to the discretion of the court. It is not a relied upon document. However, we have no objection, if court wants it."
"The report is largely legalistic in nature clarifying a law point only. The prosecution is not likely to suffer any prejudice by its production. Accordingly, in the interest of fairness of trial and transparency, I deem it proper that a copy of the said report be placed on record by the CBI," the court said. The court said in the interest of justice, the report be placed on its record.
"The case is still at the initial stage of arguments on framing of charges. The instant case is a case of grave magnitude with unimaginable allegations of corruption. It is trite to remark that justice should not only be done but should also seen to have been done," it said.
It would now hear arguments on the Law ministry report on September 21 on behalf of CBI and various accused and after that the order on framing charges could be pronounced against 17 persons including former Telecom Minister A Raja and DMK MP Kanimozhi.
New Delhi: CBI was on Monday directed by a Delhi court to file Law ministry report which said that a firm should have more than 10 percent stakes in another for being termed an associate, a plea taken by the 2G scam accused Reliance Telecom and Swan Telecom.
"No single company/legal person either directly, or through its associates, shall have substantial equity holding in more than one licensee company in the same service area for the Access Services namely: Basic, Cellular and the UAS.