The Hindu Business Line : BPL case: Essar not to act on termination notice

The Essar group will not act on the BPL Mobile Communciations (BMCL) sale termination notice to Hutchison-Essar Ltd (HEL), to the limited purpose of keeping the Department of Telecommunications (DoT) application for merger valid.

This means that the Essar group or BMCL will not initiate anything at (or intimate) DoT with respect to its August 1 notice terminating the sale of BMCL to HEL. DoT permission is required for the merger of BPL Mobile Communications with Hutchison Essar Ltd, both of which have operations in the Mumbai telecom circle.

The Bombay High Court made clarifications to this effect on Monday to the orders it had passed on August 10, 2006 in the Hutchison-Essar-BPL Mobile case. HEL had gone to court saying that the termination of the sale was invalid and that it was invoking arbitration and that meanwhile the Essar group should not create third party interests in BMCL.

The August 10th court order prevented the Essar group from creating third party interest in BPL Mobile Communications till an arbitration tribunal settled the dispute between the HEL and the Essar group.

The Court on Monday clarified that HEL had asked the Court for an order to prevent BMCL from acting on the termination for the limited purpose of keeping the DoT application valid. It clarified that Essar had argued that acquisition of BMCL shares requires approval under the DoT guidelines and that completion of such acquisition without such permission would be illegal and void.

It also clarified that the findings of the court would not influence or be binding on the arbitration tribunal. These clarifications were agreeable to both parties. Separately, sources close to HEL said that it had recently acquired permission for the merger of BMCL from DoT. But, according to sources close to the disputing parties, the Essar group is holding that the permission was for merger and not for acquisition of shares of BMCL. They said the Essar Group also felt that the DoT permission anyway arrived well after the deadline for the share purchase agreement for the sale of BMCL to HEL.

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