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2G case: CBI to argue on Law Ministry report on September 26

Last Updated: Friday, September 23, 2011 - 18:51

New Delhi: CBI is likely to advance its arguments on September 26 in a Delhi court on a Law ministry report that a firm should have more than 10 percent stakes in another for being termed an associate, a plea taken by 2G scam accused Reliance Telecom and Swan Telecom.
Special CBI Judge O P Saini, who was to hear the arguments on the report on Friday, adjourned the matter for September 26 after the counsel for the agency sought time.
The court had earlier asked CBI to place on record the report of the Ministry of Law and Justice given to the Department of Telecommunication on the issue of "associate" companies.
Law Secretary D R Meena, in his report to 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.
CBI has been alleging Swan Telecom was an associate firm of Reliance Telecom (RTL) created to circumvent the then guidelines of DoT which debarred existing CDMA players from venturing into GSM segment.

On the other hand, RTL and Swan Telecom, alleged beneficiary of the scam, have been taking the defence that they were not "associate" firms as RTL's stake in Swan Telecom 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.  

The court, after hearing arguments on the Law ministry report on September 26, may pronounce the order on framing of charges against 17 persons including former Telecom Minister A Raja and DMK MP Kanimozhi.


First Published: Friday, September 23, 2011 - 18:51
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