The Hindu Business Line : Ministry exploring ways to encash FM cos' guarantees

THE Information and Broadcasting (I&B) Ministry is holding talks with banks to explore the possibility of encashing the bank guarantees of FM radio companies operating out of Mumbai which have defaulted in payment of the annual licence fee.

Senior Government officials said that while stay orders have been obtained from High Courts in Chennai, Kolkata and Delhi, the Bombay High Court has given the Ministry permission to encash the bank guarantees. "Our officials are meeting up with the banks which have provided the guarantees to explain the position to them," they said.

The private FM companies, armed with the Court orders, have been maintaining that the Government cannot encash these guarantees.

Entertainment Network (India) Ltd (part of the Times Group), Music Broadcast Pvt Ltd, Living Media Group's Radio Today and Sun Group-owned Suryan FM had approached the Courts in the four metros. Of these, except Suryan, all the others have operations in Mumbai.

"The banks have been served with copies of the stay orders and if they allow the Government to encash the guarantees, it would tantamount to breach of Court. We do not think that the banks would like to do that," said a senior official in a private radio company.

On Tuesday, the Madras High Court, while granting an interim stay barring the Government from encashing of bank guarantee to Suryan Radio if it did not pay the annual licence fee as the Central Government has not taken a final decision on the issue of continuing with the license fee regime.

Meanwhile, the Ministry is also seeking legal opinion on the stay orders. "We are trying to get the orders vacated at the earliest and are counsels are preparing a response," said officials.

The issue of payment of licence fee by private radio operators is caught in legal tangle after they refused to cough up the annual fees. The companies sought a deferment till the Government finalises a new policy that would enable them to migrate to a revenue sharing arrangement. The companies have been claiming that the radio operations have not been profitable and the sector needs to be given some concessions.

The Government, on its part, has said that a deferment on payment of license fee was a policy decision and would violate the Election Commission's Code of Conduct.