HC asked to rehear Unitech, Telenor plea

The Supreme Court today set aside an order of the Punjab & Haryana High Court that prevented Unitech Wireless and Telenor from carrying out a proposed Rs 6,700 crore rights issue, while asking the lower court to hear the matter afresh.

Directing the high court to rehear the plea of Unitech Wireless and Telenor, a bench of Justice RV Raveendran and Justice AK Patnaik held that the interim order passed by a district court on March 1, 2011, in Gurgaon (Haryana) in this matter, would be operational for three weeks.

The district court had on March 1, 2011, restrained Unitech Wireless from giving effect to any board resolution regarding the issuance of a rights issue to raise about Rs 6,700 crore.

On the plea of four minority shareholders -- Unitech, Cestos Unitech Wireless, Simpson Unitech Wireless and Acorus Unitech -- of Unitech Wireless, the district court had restrained Unitech Wireless from giving effect to any board resolution regarding the Rs 6,700 crore rights issue.

Later, the order was challenged by Unitech Wireless and its majority shareholder Telenor in the high court, which on July 4, dismissed their plea and upheld the district court order saying that there was no need to intervene.

Unitech Wireless and Telenor Asia PTE had filed two separate petitions in the apex court challenging the HC order.

Telenor holds 67.25% stake in Unitech Wireless, that had started operations in 13 circles and is offering services under brand Uninor. The rest 32.75% stake is collectively held by the four shareholders -- Unitech, Cestos Unitech Wireless, Simpson Unitech Wireless and Acorus Unitech.

The two parties are in a tussle over the rights issue proposed by Telenor.

While the board of Unitech Wireless had proposed the rights issue, Unitech and three others had opposed it and moved to court.

In its final orders, the district court had given a go-ahead to arbitration between them and had extended its interim order of March 1 till the arbitrators settled the dispute.

Both firms submitted in the high court that to meet their roll-out obligations, the company needed funds worth Rs 6,700 crore and had failed to get assistance from any financial institution.

"When it was clear that in the present circumstances prevailing in the telecommunication industry, any funding through long-term loans was practically impossible to avail, the management of the petitioner [Telenor and Unitech Wireless] recommended its board that the necessary funding be obtained by raising additional share capital through a right issue," said the firms in their petition.

It was opposed by the four shareholders saying it was against the shareholding agreement between them.