Produce lawmin opinion on associate cos: 2G court

Though the CBI terms Swan and Loop as associates of Reliance Telecom and Essar group, respectively, a law ministry opinion sent to the department of telecommunications (DoT) last month says the two firms can be called associates only if there?s a holding company or a subsidiary relationship between them or a third company owns more than half of both. If this interpretation is accepted, Swan and Loop cannot be termed associates, which is why the accused have been calling for the opinion to be placed in court.

However, the agency had opposed it saying it was ?unsolicited?. The CBI claims it was a correspondence between DoT and the law ministry and was not material to its case.

While agreeing with the CBI?s contention, the court said it should still be placed before the court in the interest of fairness and transparency.

However, it added: ?The prosecution is not likely to suffer any prejudice by its production?.

? The report (of the law ministry) is largely legalistic in nature clarifying a law point only. The prosecution is not likely to suffer any prejudice by its production. Accordingly, in the interest of fairness of trial and its transparency, I deem it proper that a copy of the said report be placed on record by the CBI,? judge OP Saini said in his 11-page order.

Still, since the CBI’s case against Swan Telecom being a front for ADA’s Reliance Telecom is based on the definition of associate, the development can be seen as a setback for the agency. Since the CBI is ready to file its third charge sheet alleging that Loop Telecom was an associate company of Essar group, the law ministry’s definition is even more crucial to the case.

The central point in the CBI’s prosecution of companies like Reliance Telecom is that Swan Telecom was its associate and therefore did not qualify for licences under Clause 8 of the universal access service licence (UASL) guidelines. It plans to book Loop Telecom also under similar charges. Both Swan and Loop were recipients of UAS licences from former telecom minister A Raja, who is now in judicial custody in connection with the case.

Under Clause 8 of the UASL, associates are not eligible for licences if the parent firm already has a licence in the same service area, something which was true in the case of Swan and Loop. Going strictly by the ministry’s latest definition, RTL-Swan and Essar-Loop cannot be considered as associates.

The law ministry opinion also makes an interpretation of Clause 8, stating the ‘associate company’ rider applies only to ‘licensees’ and not ‘applicants’. This means a company can be an associate during the application process and still be eligible; it only needs to shed the linkage later. By this interpretation too, Swan and Loop cannot be charged for being associates, since they shed such links later.