News18» News»India»2G: Etisalat moves HC against Balwa, Goenka
2-MIN READ

2G: Etisalat moves HC against Balwa, Goenka

2G: Etisalat moves HC against Balwa, Goenka

The UAE-based firm in 2008 had paid $900 million for 45 per cent stake in Balwa-promoted Swan Telecom, which was later renamed Etislat DB.

New Delhi: Abu Dhabi-based Emirates Telecommunications Corp (Etisalat) on Thursday said it has filed a lawsuit against the promoters of Swan Telecom (now Etislat DB) alleging fraud and misrepresentation.

Etislat in a press statement said it has filed the lawsuit against Shahid Balwa, Vinod Goenka and Majestic Infracon Private Ltd in the Bombay High Court.

The UAE-based firm in 2008 had paid $900 million for 45 per cent stake in Balwa-promoted Swan Telecom, which was later renamed Etislat DB (EDB).

"Etisalat's case is that it was induced into its investment in the company that was then Swan, without any disclosure of the matters that are now alleged by the CBI and Supreme Court to have occurred in connection with the obtaining of 2G licences by EDB," the statement said.

"Those events occurred a year before Etisalat's investment. Etisalat is facing very significant financial losses on its investment in EDB despite its having no involvement in the 2G license application or award process and being entirely innocent of any allegations relating to it," the company said.

Balwa, Goenka and Majestic Infracon, it said, were responsible for Swan at that time and for subsequently marketing the investment opportunity to Etisalat.

Etisalat on Wednesday announced shutting of its India operations following the Supreme Court order cancelling telecom licenses allocated to EDB along with others in 2008.

The apex court had found fault with the government policy of allocating 122 telecom licenses on first-come-first-service basis.

Etisalat, the Middle East's largest telephone company, currently holds a 44.7 per cent stake in the Indian firm. Balwa, Goenka and Majestic Infracon were not immediately available for comments.

"The Emirates Telecommunications Corporation - Etisalat- has issued proceedings in the Indian courts against Balwa, Goenka and Majestic Infracon Pvt Ltd for fraud and misrepresentation," the company statement said.

"Given the seriousness of the allegations, and in the light of the Order on Charge and the Supreme Court decision, Etisalat as a leading international telecoms company with a high reputation for integrity and ethical behavior, has taken this action to protect its interests and those of its shareholders," it added.

Etisalat is the second foreign telecom company to announce its exit from India after Bahrain Telecom which offloaded its 42.7 per cent stake in STel. Etisalat DB, which offers services under the 'Cheers' brand name has 16.7-lakh subscribers spread across 15 circles, including Andhra Pradesh, Gujarat, Haryana, Karnataka, Kerala, Maharashtra, Mumbai and Punjab.

On February 9, Etisalat had also written off about $820 million worth value of its Indian operations by way of an impairment charge as an after effect of Supreme Court order.

Shahid Balwa, Vinod Goenka and Majestic Infracon issued a joint statement in response to Etisalat's statement. The trio in statement denied having received any notice of demand or suit papers or any wrong doing on their part. "We had filed a case for mismanagement in the CLB (Company Law Board) against Etisalat who were in management control of the JV company" the statement said.

It added that the case was later withdrawn because in discussions they said Etisalat would run the joint venture, Etisalat DB, properly." which was not done. Unlike other similar JV's who built a business and revenue, our JV went nowhere under Etisalat management," the statement from trio said.

The statement said that Etisalat DB is also facing FEMA proceedings for the investments by Etisalat. "All this will be gone into. Etisalat will be held responsible for their wrongful acts," it added.

first published:February 23, 2012, 23:01 IST