Mumbai: The Bombay High Court has admitted a petition filed by Etisalat Mauritius Ltd for winding up of its joint venture with India-based DB Group, observing that a deadlock exists between the main shareholders of Etisalat DB Telecom Private Ltd.
Justice S J Kathawalla passed the order earlier this week while hearing a petition filed by UAE government controlled Etisalat Mauritius Ltd, seeking to wind up the joint venture company on account of quashing of the 2G licenses by the Supreme Court and a “dysfunctional” board of directors.
Etisalat DB is embroiled in the 2G spectrum allotment scam and its directors - Shahid Balwa and Vinod Goenka - are facing criminal proceedings along with former telecom minister A Raja.
According to the petitioner, Balwa and Goenka approached Etisalat through Deutsche bank to convince it to invest in Swan Telecom Ltd. “Balwa and Goenka in the course of negotiations made false representations as to the lawful manner in which the licenses were acquired. The duo represented that the licenses had no basis to be revoked as they had fulfilled all legal obligations,” the petitioner company claimed.
The high court after hearing the petition observed that it deserved to be admitted.
“I am satisfied that the company (Etisalat DB) has lost its substratum. There exists a deadlock between the main shareholders of the company. There is complete lack of faith and probity resulting in irretrievable breakdown between the major shareholders of the company. The liabilities of the company have far exceeded its assets,” Justice Kathawalla said.
Etisalat Mauritius invested over Rs 3500 crore in Swan Telecom and the company was renamed Etisalat DB Telecom Private Ltd.
Among other grounds for seeking winding up of the company, the petitioner company mentioned lost reputation of Etisalat DB following the CBI proceedings against it in the 2G Scam.
Opposing the winding up petition apart from the DB Group was another major shareholder - Majestic Infracon Pvt Ltd. According to this company's lawyers, there was scope for reviving the company and hence the petition seeking to wind it up should not be admitted.
The court, however, rejected the revival plans observing that they were vague.
According to the HC order on admitting the winding up petition, Majestic is said to be 100 per cent owned and controlled either directly or indirectly by Balwa and Goenka. “Majestic was formerly known as Tiger Trustees Pvt Ltd which has been the subject of investigation in the 2G scam,” the court said in its 70-page order.
The court has now posted the matter for hearing on December 18.
