HC reserves order on Hutchison Essar-BPL dispute

Mumbai, Aug 3 (UNI) The Bombay High Court today reserved its order for next week on the dispute between Hutchison Essar and BPL Mobile Communications (Mumbai circle) following the termination of their joint venture (J V).

Justice Nishita Mhatre reserved the order for next week. Adv Janak Dwarkadas, appearing on behalf of BPL (Essar) submitted that no third party could purchase their shares until the order in this matter was passed.

Arguing on behalf of Hutchison Essar, Adv Iqbal Chagla contended that 97.5 per cent (Rs 1616 crore) of the consideration for the share-purchase agreement (SPA) had already been paid to BPL and a sum of about Rs 50 crore remained to be paid.

The approvals from the Department of Telecommunication (DOT) had been applied for and if the application was not approved, it was Hutch's concern, Adv Chagla contended. But, the transfer of shares was not subject to the DOT approval, he contended.

However, Adv Dwarkadas argued that DOT's approval was a pre-requisite and had to be fulfilled before the transfer of shares as per the agreement drawn for the JV.

The court was also told that the BPL Board of Directors had passed a resolution in May stating that, subject to approval from DOT, all the shares would be transferred in the name of Hutchison Essar.

Advocate Dwarkadas further contended that according to the guidelines on mergers and transfers, one company in the same circle could not own a bandwith of over 15 mega-hertz. If the two were merged without merging the licences, Hutch would own 20 mega-hertz of bandwith in violation of the rules.

Also, there was a requirement of DOT approval for intra-circle transfer, he said.

According to the SPA, the proposed merger (including the transfer of shares) could not be completed until all the previous conditions were met and the approval was one of them and could not be waived.

He said that BPL was ready to pay the deposited sum of money within five days as per the conditions of termination of the agreement.

Adv Chagla argued that he was not praying for waiving off the condition but just praying that an interim relief be granted and BPL be directed not to conduct any deal of its shares with another party until the arbitration tribunal had dealt with the matter.

The BPL's counsel also told the court that Hutch was trying to handicap them as according to the conditions for termination of the venture, BPL could not take any loans or declare dividends either.

If BPL did not end the agreement, members from Hutch would remain on their Board and have access to their confidential information.

Subject to disapproval from DOT, they would remain competitors and have an unfair advantage due to the standing agreement, he contended.

It may be recalled that Essar had decided not to sell the BPL cellular business in Mumbai, the most lucrative metro circle, to Hutchison Essar, a company in which it holds about 33 per cent stake.

Meanwhile, the latest turn of events has contributed, in a big way, to the already sour relationship between both the partners over Hutchison's decision to bring Egyptian mobile operator ORASCOM into the Board of Hutchison Essar after a global transaction with that company.

Essar had vehemently opposed the entry of the company into the board through an indirect 19 per cent stake citing security reasons.

It had bought BPL Mobile at an enterprise value of USD 1.1 billion last year. The deal was later extended to Hutchison-Essar for the eventual merger into the JV.

The deal for three circles such as Maharashtra and Goa, Tamil Nadu and Pondicherry and Kerala concluded in January while the merger in Mumbai was pending for the last ten months.

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