No evidence to show Essar group controlled Loop Telecom: Court

Essar Group promoters Ravi Kant Ruia and Anshuman Ruia were today acquitted in a case arising out of the 2G scam probe by a special court which said there was no evidence to suggest that they controlled Loop Telecom Ltd, an alleged beneficiary of the spectrum allocation.
Special judge O P Saini, who acquitted all 17 accused including ex-telecom minister A Raja in the main CBI case holding that there was no scam, also let off Loop Telecom promoters I P Khaitan and Kiran Khaitan saying there was no material on record to indicate that bogus transaction was carried out for securing 2G licences.

"The weight of the evidence, both oral and documentary, is that I P Khaitan was the man behind the entire events alleged in the instant case. Evidence is on record to the effect that I P Khaitan owns his own group of companies known as 'Khaitan group' and it is separate and independent from Essar group. When two groups are independent, there can be no violation of Clause 8.
"The witnesses examined by the prosecution itself deposed that BPL companies were acquired by I P Khaitan and it was I P Khaitan on whose instructions the applications for 21 UAS licences were filed. In these circumstances, there is no material on record to indicate that it was a sham or bogus transaction. Evidence referred to above is almost crystal clear and the same is against the prosecution," the court said.

Immediately after the verdict, Essar Group in a statement, said, "We are thankful to the court for the judgement as it vindicates our stated position and the court has appreciated/vindicated it."
The Ruias, the Khaitans; Essar Group Director (Strategy and Planning) Vikash Saraf, had faced trial in the case, along with three telecom firms Loop Telecom, Loop Mobile India and Essar Tele Holding.

CBI had listed the accused in its charge sheet on December 12, 2011, alleging that they had cheated the Department of Telecommunication (DoT) by using Loop Telecom as a "front" to secure 2G licences in 2008 in violation of Clause 8 of the Unified Access Service License (UASL) Guidelines.

According to the Clause 8 of the UASL guidelines "No single company/legal person, either directly or through associates, shall have substantial equity holding in more than one licensee company in the same service area for Access Services namely; Basic, Cellular and Unified Access Service".
The court was critical of the conduct of the DoT and said if it felt that spirit of clause 8 was being violated by means of "excessive debt funding" by one licensee company to another then it was free to amend its guidelines.
"There is no material on record that DoT took any steps to do any of these things. Instead of course correction by taking appropriate administrative action, the DoT started playing victim claiming that it has been cheated by Loop Telecom Limited as it was indebted heavily to a group, which already had more than 10 per cent equity in an existing pan India licensee, i.e, Vodafone Essar Limited," the court said.

It said the prosecution has failed to prove that Loop Telecom Ltd was a company of Essar group or was substantially controlled by it and therefore was not eligible for applying of UAS licences.
Rejecting CBI's contention that DoT was cheated into issuing 21 UAS licences, the court said that when the prosecution has failed to prove that Loop Telecom Ltd was a company of Essar group then there can be no false representation and no ingredients of Section 420 IPC are made out.
"In the instant case, there is no material on record to show that the applications for 21 UAS licences were filed at the instance of Vikash Saraf. There is also no evidence that in the filing of applications Ravi Kant Ruia, Anshuman Ruia or Kiran Khaitan were involved.

"The evidence is to the effect that the applications were filed at the instance of I P Khaitan, which version matches with the record. Thus, there is no evidence indicating any deception of DoT by any of the accused," it said.
The court also refused to agree with the submission that Essar group, which had 33 per cent equity in Vodafone Essar Limited, a pan India licensee, acquired licences in 21 service areas by using Loop Telecom Limited under the guise that it was owned by I P Khaitan and his wife.
"The witnesses have deposed that all the transactions were genuine one. Thus, there is no evidence on record that the transactions were not genuine or were sham or circuitous aimed at controlling of Loop Telecom Limited by Essar group.

"Accordingly, there is no question of lifting any corporate veil. It may be noted that corporate veil is a legal device and is not illegal by itself. It is acquired by a company on its incorporation. It can only be lifted when fraud is committed by taking advantage of the corporate veil. Thus, there is no merit in the submission of the prosecution that corporate veil is required to be lifted," the court said.
The court said that the alleged motive that Essar group acquired BPL companies (now known as Loop) in the name of Khaitan in order to run telecom business after exiting Vodafone Essar Limited could not be proved as none of the witnesses deposed a word about it.