The tussle between the partners of the trouble ridden telecom JV - Etisalat DB - is heating up. In the latest turn of events, Majestic Infracon has filed a fresh suit before the division bench of the Bombay HC, seeking to stay an earlier order by a single judge bench, which had admitted the winding up petition filed against the telecom JV.
Majestic Infracon, owned and controlled by Shahid Balwa and Vinod Goenka, is a part of the Mumbai based DB Group. Majestic holds 46 percent in the JV, while the UAE government controlled Etisalat owns a 44.73, representing investments of over 3500 cr.
As a fall out of the 2G scam, the SC had cancelled licenses that had been secured by the telecom JV. Moreover, criminal proceedings were initiated against the promoters - Shahid Balwa and Vinod Goenka. The two were arrested and chargesheeted by the CBI.
As the 2G saga unraveled, in a unique turn of events an investor and shareholder, in the form of Etisalat, moved the Bombay HC for winding up the very company whose shares it held - Etisalat DB. Most winding up petitions are pressed by creditors who have failed to recover dues from the concerned company.
Etisalat moved the Bombay HC, with allegations of malafide intent behind conduct of Indian partners. In the suit, the UAE based company alleged the Indian partners had withheld sensitive information and that there was a lack of sufficient disclosures.Etisalat had also argued that the fall out of the 2G scam being unearthed had severely hurt the roll out. Etisalat had also maintained that the brand and reputation of the UAE based company had suffered due to association with the tainted Indian partners.
Upholding these arguments, the Bombay HC had admitted the winding up petition against Etisalat DB, observing that there appeared to be irreparable dioscrd between the partners and that the JV had mounting liabilities that far outweighed the assets it commanded. Etisalat DB, as of April 2013, owed 4200 cr to various creditors.
Indian partners, represented in the suit through Majestic Infracon, are likely to pursue a line of argument that questions the heavy reliance placed on the CBI chargesheet for allowing a winding up petition.
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