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Ravi Ruia approached me to buy stake in BPL for others: witness

Ruia, along with four other accused, is facing the trial in the case

Press Trust of India  |  New Delhi 

A CBI witness today told a Delhi court trying a case arising out of the probe into that Essar Group promoter had approached him seeking stake in Communications Ltd on behalf of other investors, including Loop Telecom promoter IP Khaitan.

Deposing as a CBI witness, Rajeev Chandrasekhar, who is a former Chairman and CEO of Communications Ltd, said that Ruia had told him that he was negotiating with him to acquire the stake on behalf of other investors.

In its charge sheet, the CBI had alleged that promoters of Essar Group, "in league" with Khaitans had "designed a scheme" to acquire Communications Ltd through Santa Trading Pvt Ltd and other Mauritius based foreign companies, to circumvent the restrictive clause 1.3 of the Cellular Mobile Telephone Service (CMTS) licences.

As per clause 1.3 of the CMTS licence conditions, Essar Group companies, directly or through associates, could not acquire more than 10% equity in operating companies.

"In this background during a business conference, approached me and suggested that he could acquire my stake in Communications Limited," Chandrasekhar told Special CBI Judge OP Saini.

"Since confirmed that he waess acting on behalf of  some other invtors and that he would assume responsibility of settling the litigation and other government and regulatory approvals, I introduced my financial and legal advisors and internal team to his team to commence the negotiations," he said.

He said that in 2004, he had decided to sell his stake in Communications Ltd as the company was engaged in a series of litigation.

He told the court that they had received proposal from various companies but it could not fructify due to the ongoing litigation after which Ruia had approached him for acquiring the stake.

Essar Group promoters and Anshuman Ruia and Loop Telecom promoters I P Khaitan and Kiran Khaitan and Essar Group Director (Strategy and Planning) Vikash Saraf are facing trial in the case.

Besides the five accused persons, the CBI had also filed charge sheet against the three companies -- Loop Telecom Pvt Ltd, Loop Mobile India Ltd and Essar Tele Holding.

The CBI, in its charge sheet, had alleged that Essar, which already had a stake as an existing telecom operator, created a "front company" Loop Telecom to secure additional spectrum which was in contravention of then telecom policy.

Chandrasekhar, whose recording of statement concluded today, told the court that was an existing company and was owned by his father-in-law T P G Nambiar.

He said that in 2004 he decided to sell his stake in Communication Ltd due to a series of litigations among the shareholders and this was affecting its ability to raise capital and make necessary investments to grow.

He said that after having initial talk with Ravi Ruia, the entire negotiations were conducted by JM Morgan Stanley, the financial advisors for BPL, and legal advisors with Saraf and their lawyers.

He said that the total consideration amount for sale of his stake in Communications Limited was Rs 304 crore.

During his cross examination by senior advocate S V Raju, who appeared for Ruias and Essar Teleholdings Limited (ETHL), Chandrasekhar said "It is correct that when met on the first occasion in a business conference, he told me that he had no liquidity with him and he was negotiating on behalf of other investors including I P Khaitan."

First Published: Mon, January 28 2013. 22:00 IST