Acquitted in 2G case, Unitech, Loop may seek compensation

Two telcos acquitted in the 2G case by the special court last week are now evaluating the legal option, according to company executives and legal advisors.

Unitech Wireless and Loop Telecom were charged by the Central Bureau of Investigation (CBI) in the case, the first for allegedly conspiring with the then telecom minister to subvert the licence issue process, and the second for allegedly being a front for the Ruias of Essar Group.

The special court hearing the case ruled that there was no evidence of either.

“We have the TDSAT order of 2015 which we will proceed on and we have already filed for an international arbitration,” said Nalin Khaitan, director of Khaitan Holdings Mauritius, an investor in Loop Telecom.

His reference is to a ruling by the highest appellate body in telecommunications that Loop could ask for refund for the cancelled licences if it was cleared of all charges in the 2G case.

In 2012, the Supreme Court cancelled 122 licences including 21 of Loop’s citing irregularities and arbitrariness in the allotment.

Khaitan added the case had hampered the company’s business and the government had failed to protect its investment in Loop Telecom.

The arbitration has been filed against India for failing to protect provisions of the bilateral investment treaty it has with Mauritius.

Unitech, which saw 22 of its licences cancelled is also seeking redressal. “We are considering appealing against the Supreme Court decision to scrap our licenses in 2012, at a time when the 2G special court has found no criminal intent or wrong doing in the grant of these licenses. The decision we have to take is in which court we should appeal. The legal route is still being thrashed out,” said a top legal advisor to the Unitech Group. He did not wish to be named.

The 122 2G licenses were granted in 2008 when A Raja was the telecom minister. Following a report by the government auditor of huge notional losses to the state on account of the ad-hoc and arbitrary nature of the allotments, the federal investigating agency initiated a probe. Meanwhile, responding to a public interest litigation on the allotment, the Supreme Court cancelled the licences. A special CBI court was created to hear the cases related to criminality and money laundering. The court issued its verdict last week, acquitting all 35 accused and blaming CBI and the Enforcement Directorate for not presenting proper evidence. Both agencies plan to appeal the case.

Swan Telecom also had 15 licenses cancelled, but people familiar with the thinking at the group said DB Group, the Indian partner, first needs to resolve its pending litigation with Etisalat before appealing for damages.

The UAE-based Etisalat had moved the Company Law Board in February 2012, following the cancellation of licences , claiming fraud and misrepresentation of facts by its Indian partner.