The Delhi High Court on Tuesday asked the Centre if it can defer the third phase of FM radio auction after Kalanithi Maran-led Sun TV Network alleged denial of permission to participate in the e-auctions scheduled to start from July 27.
The government is supposed to inform the court on Wednesday on the possibility of postponing the auction of 135 private FM channels in 69 existing cities in third phase.
The I&B ministry had last week rejected the application of Digital Radio Broadcasting Ltd (DRBL), which runs the radio station Red FM 93.5, to participate in the phase III of the FM auctions after the home ministry denied Sun TV, which is the partial owner of DRBL, security clearance citing the ongoing judicial proceedings and allegations of money laundering in the Aircel-Maxis case against the Sun TV promoter Kalanithi Maran and his brother Dayanidhi Maran.
Sun TV contended that security clearance for the auction should not have been denied as FM radio auctions did not have any connection with the ongoing probe by the CBI and Enforcement Directorate against the Marans in the Aircel-Maxis case.
Sun TV’s counsel Kapil Sibal and Abhishek Manu Singhvi argued that the Maran brothers are not owners of DRBL. Kalanithi Maran owns only 22% share in the firm while Dayanidhi Maran owns none, they argued.
According to DRBL, the rejection of security clearance and denial of permission to participate in the auction will have disastrous consequences on the business and investment made by it. Denying any such threat to the economic integrity of the country, it said that the impugned provisions of the tender documents, which mandate that the company as well as all directors on it board shall take security clearance from the government authorities, are violative of its fundamental rights. Besides, the decision to deny security clearance to the company and reject its application for pre-qualification is arbitrary, unjust, illegal, malafide and discriminatory and contrary to the conditions for qualification/disqualification set out by the government itself in the tender documents.
During the hearing, the HC observed that the security clearance process of the government is ‘vague’ and ‘prone to misuse’. However, the government argued that it was obliged to look into the shareholding pattern of the company to figure out where the money in question is coming from. It said it is important to ensure that money in auctions is not tainted money. The government also told the court that former telecom minister Dayanidhi Maran was a stake holder in the firm till 2010.
Entertainment Network India, which owns Radio Mirchi, also moved an application seeking to be made a party in the suit. It argued it would be better if auctions are postponed till the case is decided.