The National Company Law Tribunal (NCLT), in its order admitting Reliance Communications Ltd’s (RCom’s) petition for merging its wireless division with Aircel Ltd, overruled the telecom department’s objections that the Supreme Court had restrained Aircel from selling and trading 2G spectrum allotted to it in 2006.
It, however, said the department of telecommunications (DoT) can take its own view when the merger comes to it for approval. The tribunal had admitted the merger petition on 14 August; the order was published on its website on 16 August. The hearing on approving the merger will begin on 13 September.
The tribunal agreed with the arguments of Aircel that the merger plan does not involve any sale of the spectrum and no cash is involved as Aircel is acquiring assets and not selling assets.
NCLT also held that the merger does not envisage any contractual right over Aircel’s licence, so DoT will be able to proceed against the company if the Supreme Court invalidates the licence.
A bench headed by Chief Justice J.S. Khehar had said in a 6 January order that it may cancel Aircel’s use of the 2G licences if Malaysian businessman T. Ananda Krishnan of the Maxis Group continued to avoid appearing before Indian courts in a case connected with irregularities in grant of 2G spectrum licenses. Maxis Group, owned by Krishnan, has a 74% stake in Aircel.
Apart from DoT, lenders including China Development Bank, telecom operators such as Swedish network provider, Ericsson had raised objection to the deal.
An RCom spokesperson declined to comment.
NCLT said that an objection can be filed only if the outstanding debt of the creditor is more than 5%. On holding a meeting with creditors (before merger proposition) NCLT held that it is a business decision and NCLT would examine the merger only from a point of view of law and that whether the deal is fraudulent or not.
It stated that the new provisions under NCLT ensure principles of natural justice by giving notice to all parties and speedy judgement by having a threshold on who can object. The merger with Aircel is crucial for RCom to reduce debt on its books at a time when new entrant Reliance Jio Infocomm Ltd is squeezing incumbents’ profitability.
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.
Source: Mint