DoT has no say in merger of companies, Idea tells High Court
Aditya Birla group firm Idea Cellular on Tuesday submitted before the Delhi High Court that the Department of Telecom (DoT) has no say in the merger of companies.
Challenging a single judge bench order, which said that six licences of Spice Communications would not be transferred to Idea Cellular, the company told Justices Vikramjit Sen and Siddharth Mridul that DoT lacked the power to decide on mergers and put conditions on them.
"Merger of company is different from merger of licences and DoT has only authority to regulate latter (licences)," said senior advocate A M Singhvi, appearing for Idea Cellular. Citing telecom regulations, he said, "Prior approval of DoT is required for merger of licences and not for merger of companies."
Besides, he said DoT plea ought to have been rejected on the sole basis of delay of three years after the AB Group firm acquired the Spice Communications in 2008. Alleging suppression of facts by DoT, Singhvi said that after one year of the merger, it took stay from company court without giving notice.
On July 4, the Delhi High Court had said the six licences of Spice would not be transferred to Idea as the company did not comply with the licence and merger guidelines.
The court had also slapped a fine of Rs 1 crore on Idea for not giving the correct information to the court. It had said Idea had not put the rejection letters by DoT on merger of licences and failed to place on record relevant documents.
The High Court had also said that it is "of the view that costs should be imposed on Idea for not bringing to the notice of this Court the rejection letters dated January 7, 2010 and January 18, 2010 issued by DoT and for not placing on record relevant and material documents like Licence, Merger Guidelines and correspondence exchanged between the parties."
The company bench of the High Court had further said that till DoT gives its permission to Idea to use the licences of Spice, the "overlapping licences of Spice shall forthwith stand transferred with DoT. The spectrum allocated for such overlapping licences shall also forthwith revert back to DoT."
It had said that as Idea has used the overlapping licences without any prior permission of DoT from February 5, 2010, till date "in contravention of the Licence and Merger Guidelines, it is directed that it shall be open to DoT to pass any order for such breach".
The order had come over an application filed by DoT requesting it to recall and stay its earlier order allowing the amalgamation of Spice with Idea. On February 5, 2010, the High Court had sanctioned the merger scheme. However, after DoT made an application, it had stayed the entire scheme on March 30, 2011.
Spice had six licences at the time when Idea bought BK Modi-promoted Spice for Rs 2,176 crore in June 2008, and two licences were overlapping with the Aditya Birla group firm. DoT had submitted that merger was impermissible as some of the overlapping licences are less than three years old. The court listed the matter for further hearing on Aug 18.