The Ministry of Corporate Affairs (MCA) has re-affirmed its stance that it does not consider Swan Telecom and Loop Telecom to be the associates of Reliance Telecom and the Essar Group.
Further, it has asked the Central Bureau of Investigation (CBI) to seek legal opinion on whether the definition of an associate company is applicable when interpreting the Indian telecom sector?s norms which debar operators and their subsidiaries, from holding more than 10 per cent stake in two different operators.
Currently, executives of Swan Telecom and Reliance Telecom are being charged with violating the 10 per cent cross-holding norm.
The MCA has also said that the Department of Telecommunications (DoT) should determine whether these two companies were in violation of the 10 per cent rule, referred to as Clause 8 in the mobile licence.
The MCA has stated that its reports are based on the returns filed by the companies and DoT has not investigated the case in-depth.
The CBI has charged Swan Telecom of being an associate of the Reliance Group, basing this claim on the fact that Tiger Traders, which held a majority stake in Swan, was an associate company of the Reliance Group, thereby violating the 10 per cent clause. It has also alleged that its scrutiny indicated that the Essar Group, through its associates held substantial equity holding in Loop Telecom in violation of existing rules, since the company also held 33 per cent stake in Vodafone Essar.
