Cloud Over Aircel-RCom Deal as Krishnan’s Absence Irks SC
Court warns merger may suffer if Aircel parent Maxis’ founder fails to honour summons
New Delhi: The Supreme Court refused to let Aircel off the hook over the failure of Malaysian businessman T Ananda Krishnan and parent company Maxis to appear in a corruption trial, putting a planned merger with Reliance Communications under further threat.
This followed the main accused in the case, former telecom minister Dayanidhi Maran and his brother and media tycoon Kalanithi Maran, being acquitted by the lower court on Thursday. Maxis and its owner Krishnan, who haven’t been discharged in the case, haven’t appeared in court, despite a stern message calling on them to do so at the January 6 hearing by the Supreme Court bench headed by chief justice JS Khehar. “You are running away from the law. You can come here, but you don’t want to,” he said on Friday.
it may not allow Aircel-RCom deal; may order auction of Aircel spectrum if parent Maxis’ founder T Ananda Krishnan doesn’t appear in court
case against Krishnan & three others still stands, despite other accused in CBI-Maxis case getting discharged Thursday court may punish telco, but Krishnan, who is only an indirect shareholder in the company, may still not come “Where is he (Krishnan)? He has been summoned by a court. If he doesn’t come here, there will be consequences. Is anyone denying him his rights? He doesn’t care. Who is he? And you people stand up to defend him?”
There were harsh words directed at others as well by the bench, which included justices NV Ra- mana and DY Chandrachud.
“One after the other people are running away from this country, yet you are doing nothing,” Khehar told top lawyers, including the attorney general, who was appearing for lenders to Aircel. “All of you on this side are fighting by proxy… to protect him,” he said. The bench has said it would order Aircel’s spectrum to be auctioned off if Krishnan and Maxis representatives didn’t appear in the trial court.
A group of lenders led by State Bank of India had filed a plea to be heard in the case, saying they would be “severely” affected if the company was restrained from earning revenue using its 2G airwaves, which would impact repayment to creditors. The banks are opposed to an auction. Aircel counsel Abhishek Manu Singhvi initially tried to argue that Thursday’s trial court order meant the case was virtually over.
“The case is of conspiracy. The main case is gone, the key accused discharged. There is no offence as of today,” he pointed out.
The bench shrugged off the argument. “The case against them still stands. The summons still exist,” the chief justice observed. “You have not been responding to the due process. So can you be allowed to continue to earn revenue?”
THREAT TO MERGER
At one point the bench threatened to stall the planned merger between Aircel and Reliance Communications (RCom). “We will not allow this transfer to Reliance. We will ask the government to auction it off. We will adopt any means so that no one runs away with a debt to the country or tries to avoid summons of an Indian court. You are hand in glove with him.”
Despite Friday’s ruling, RCom stayed buoyant on the strength of Thursday’s acquittals, rising 8.75% to ₹ 36.65. Khehar wanted to know who would benefit from the AircelRCom deal. “We may not hinder the deal. We will only take it as the threshold deal (for any auction),” he hinted, adding that the Maxis boss appeared to have strong backing. “Everyone seems to be fighting for him (Krishnan) by proxy to defend him. This is the strange thing in this country.”
Eventually, Singhvi tried to distance himself from Maxis and Krishnan by saying that Aircel was in no position to get them to appear in court. “The court can punish us, but he still may not come,” Singhvi said. He also sought to show the court that Krishnan was only an indirect shareholder in the company and not a direct shareholder.
He also argued that there was no sale or purchase involved in the merger deal with Reliance. There was no money changing hands, no profit being repatriated, he contended. The bench demanded more clarity on Aircel’s holding companies and its ownership patterns before passing any orders.
Aircel told the Supreme Court previously that it has not received any summons in the case and the company had no control over the accused. It has also said that allegations of profits or funds being repatriated were untrue because Aircel has been a loss-making entity since it was acquired by Maxis in 2006.
The case will now be taken up after Aircel offers clarifications on the points raised by the court by way of an affidavit, most possibly on Wednesday. Aircel, RCom and State Bank of India didn’t respond to emails seeking comment. RCom is in the process of demerging its wireless business and merging it with Aircel’s wireless business to create a new entity in a non-cash deal. The transaction will allow RCom to pare its debt significantly, it has said.
“Today’s observations have come as quite a shock to us,” said a senior executive at one of the telcos involved. “We had expected that after Thursday’s acquittals, this case will fall through as well.”
On Thursday, the special court acquitted the Marans of charges that they forced to sell promoter C Sivasankaran’s stake in Aircel to Malaysia’s Maxis in 2006, as part of a quid pro quo in the form of bribes.
Telco says no money changing hands and no profit being repatriated in deal with RCom