Delhi District Court
3. Title: Cbi vs . (1) Ravi Kant Ruia (A1); on 21 December, 2017
IN THE COURT OF O. P. SAINI: SPL. JUDGE, CBI (04)
(2G SPECTRUM CASES), NEW DELHI
1. CC No: 01(B)/11
2. Case RC No: 45 (A) 2009, CBI, ACB, New Delhi.
3. Title: CBI Vs. (1) Ravi Kant Ruia (A1);
(2) Anshuman Ruia (A2);
(3) I. P. Khaitan (A3);
(4) Smt. Kiran Khaitan (A4);
(5) Vikash Saraf (A5);
(6) M/s Loop Telecom Limited (A6);
(7) M/s Loop Mobile India Limited
(A7); and
(8) M/s Essar Teleholdings Limited
(A8).
4. Date of Institution : 12.12.2011
5. Date of Commencement
of Final Arguments : 01.04.2015
6. Date of Conclusion of
Final Arguments : 24.04.2017
7. Date of Reserving Order : 05.12.2017
8. Date of Pronouncement : 21.12.2017
Presence/ Appearance:
Sh. Anand Grover Sr. Advocate/ Spl. PP with
Sh. K. K. Goel & Sh. A. K. Rao Sr. PPs, Ms. Sonia
Mathur Advocate, Sh. Nikhil Borwankar; Sh. Mihir
Samson & Ms. Chitralekha Das Junior Counsel and
Inspector Manoj Kumar for CBI.
CBI Vs. Ravi Kant Ruia and others Page 1 of 526
Sh. Harish Salve Sr. Advocate with Ms. Neeha
Nagpal Advocate for accused M/s Essar Teleholdings
Limited (A8);
Dr. Abhishek Manu Singhvi Sr. Advocate with
Sh. Mahesh Aggarwal, Ms. Neeha Nagpal and Ms.
Smriti Sinha Advocates for accused Ravi Kant Ruia
(A1) and Anshuman Ruia (A2);
Sh. Dayan Krishnan Sr. Advocate with Sh.
Arshdeep Singh Khurana Advocate for accused I. P.
Khaitan (A3), Ms. Kiran Khaitan (A4) and M/s
Loop Telecom Limited (A6);
Sh. S. V. Raju Sr. Advocate with Sh. Sanjay
Abbot and Sh. Raghav Shankar Advocates for
accused Vikash Saraf (A5); and
Ms. Ishita Srivastava Advocate on behalf of
Official Liquidator for accused Loop Mobile (India)
Limited (A7).
JUDGMENT:
The brief facts of the case are that on 21.10.2009, the CBI registered an FIR vide RC DAI 2009 A 0045 against unknown officials of Department of Telecommunications (DoT), Govt. of India, unknown private persons/companies and others for the offence punishable under Section 120B IPC read with Section 13(2) r/w 13(1)(d) of Prevention of Corruption Act, 1988 (PC Act), on allegations of criminal conspiracy and criminal misconduct, in respect of allotment of Letters of Intent CBI Vs. Ravi Kant Ruia and others Page 2 of 526 (LOI), Unified Access Services (UAS) Licenses and spectrum by the DoT. Investigation of the case was taken up and charge sheet dated 02.04.2011 and First supplementary chargesheet dated 25.04.2011 were filed before this Court.
2. During the period such investigation was in progress an SLP (Civil) Appeal no. 24873/2010 was filed by CPIL & Others before Hon'ble Supreme Court of India, in which Hon'ble Supreme Court of India granted leave vide an order dated 16.12.2010 and decided to monitor the investigation of this case. Vide the aforesaid order dated 16.12.2010, Hon'ble Supreme Court of India also directed that: "The CBI shall conduct thorough investigation into various issues highlighted in the report of the Central Vigilance Commission, which was forwarded to the Director, CBI vide letter dated 12.10.2009 and the report of the CAG, who have prima facie found serious irregularities in the grant of licenses to 122 applicants, majority of whom are said to be ineligible, the blatant violation of the terms and conditions of licenses and huge loss to the public exchequer running into several thousand crore. The CBI should also probe how licenses were granted to large number of ineligible applicants and who was responsible for the same and why the TRAI and the DoT did not take action against those licensees who sold their stakes/equities for many thousand crore and also against those who failed to fulfill rollout obligations and comply with other conditions of license."
3. The eligibility of all the companies which were allocated LOI on 10.01.2008 by the DoT was also investigated CBI Vs. Ravi Kant Ruia and others Page 3 of 526 by CBI and during investigation allegations came to notice that M/s Loop Telecom Ltd, which had applied for UAS licenses in 21 Telecom circles in September 2007 was a front company of M/s Essar Group. M/s Loop Mobile India Ltd. had been operating a UAS license since 2005 in the Mumbai Service Area. It was alleged that M/s Essar Group which already had a stake of 33% in M/s Vodafone Essar Ltd., a telecom operator in all the 22 telecom circles, was controlling substantial stake in the aforesaid two companies in violation of the UAS guidelines dated 14.12.2005 and UAS license agreements signed by M/s Vodafone Essar Ltd. with DoT. It was further alleged that the accused persons belonging to M/s Loop Telecom Ltd. / M/s Loop Mobile India Ltd and Essar Group of companies, fraudulently suppressed the facts of association of the two Loop companies with M/s Essar Group of companies while applying for new licenses to DoT, in order that DoT considers these companies as entities which are not substantially controlled by Essar Group or are associates of Essar Group. The said accused persons, therefore, dishonestly or fraudulently got the 21 new UAS licenses and continue to operate the Mumbai License of Loop in contravention of the applicable guidelines.
4. Investigation has been carried out on the allegations that M/s Loop Telecom Ltd., and associated persons including Essar group persons / companies, cheated the DoT, Government of India by concealing the actual stake holders of M/s Loop Telecom Ltd. behind a corporate veil, while applying for and getting 21 new UAS Licenses and got the 21 UAS Licenses and CBI Vs. Ravi Kant Ruia and others Page 4 of 526 valuable spectrum for this company.
5. The UASL Guidelines dated 14.12.2005 were issued by DoT to ensure fair competition in the mobile telephony and thereby bar same entity holding more than one license in the same telecom circle.
6. For finalization of NIT & Tender Document for inviting applications / bids for fourth cellular operator, a meeting was held by the DoT. The officers deliberated upon the clause to be inserted to ensure competition. In this context, in another meeting dated 02.03.2001, DoT decided as below: "Substantial equity holding may be defined as equity of 10% or more. For the purpose of adding clarity with regard to ensuring competition and meaning of substantial equity, Para 1.3 (ii)/ Section IV of Commercial Conditions will be modified as below:
"No single company/ legal person, either directly or through its associates, shall have substantial equity holding in more than one licensee company in the same service area for the same service.
'Substantial equity' herein will mean 'an equity of 10% or more'. A promoter company cannot have stakes in more than one licensee company for the same service area."
7. Accordingly, under Section 4 (Commercial Conditions) of the tender document, following was mentioned at clause 1.3: "1.3 The licensee shall also ensure that:
(i) Any changes in share holding shall be subject to all necessary statutory requirements.CBI Vs. Ravi Kant Ruia and others Page 5 of 526
(ii) No single company/legal person, either directly or through its associates, shall have substantial equity holding in more than one licensee company in the same service area for the same service. 'Substantial equity' herein will mean 'an equity of 10% or more'. A promoter company cannot have stakes in more than one licensee company for the same service area.
(iii) Management control of the licensee company shall remain in Indian hands."
8. Later, the aforementioned clause 1.3 also formed part of the license agreement signed by DoT with various Basic Telephony operators in 2001. It also formed clause 1.4 of the license agreement signed by DoT with Cellular Mobile Telephony Service operators subsequently. In the license agreements signed in 2004, this clause was included as clause 1.4.
9. Further, at this time the existing mobile telephony licensees of 199597 were also informed by DoT of amendments in their licenses as a consequence to migration to revenue sharing regime of New Telecom Policy 1999 vide letters. Vide these letters, they were informed that the licensees shall forego the right of operating in the regime of limited number of operators after 1.8.1999 and shall operate in a multipoly regime. In this context, following proviso were also added in para (ix): "Notwithstanding anything approved under the Proviso described in (viii) above, the following shall always be complied with and shall never be violated:
(a) The statutory prescriptions of any nature including but not limited to the provisions of CBI Vs. Ravi Kant Ruia and others Page 6 of 526 the Monopolies and Restrictive Trade Practice Act - 1969.
(b) No single company / entity shall have any equity in more than one licensee company in the same service area for same service.
(c) There shall be cap of 49% on foreign equity. Management control of the licensee company shall remain in Indian Hands."
10. Similar license condition was subsequently adopted as part of UASL Guidelines dated 14.12.2005 and the Clause 8 of the UASL Guidelines dated 14.12.2005 provided that: "No single company / legal person, either directly or through its associates, shall have substantial equity holding in more than one LICENSEE Company in the same service area for the Access Services namely; Basic, Cellular and Unified Access Service. "Substantial equity' herein will mean 'an equity of 10% or more'. A promoter company / Legal person cannot have stakes in more than one LICENSEE Company for the same service area. A certificate to this effect shall be provided by the applicant's Company Secretary along with application."
11. In the year 2005, M/s BPL Communications Ltd (now known as Loop Mobile Holdings India Ltd LMHIL), promoted by Sh. Rajeev Chandrasekhar and Sh. TPG Nambiar, was having UAS licenses in four telecom circles through its two subsidiaries viz. M/s BPL Mobile Communication Ltd (now known as M/s Loop Mobile India Ltd) for Mumbai circle and M/s BPL Mobile Cellular Limited for Tamil Nadu, Kerala and Maharashtra circles. At that time, the share holding of these companies was as under: CBI Vs. Ravi Kant Ruia and others Page 7 of 526 A. M/s BPL Communications Ltd. (Now, M/s Loop Mobile Holding India Ltd): 1 Shares held by Sh. Rajeev Chandrasekhar 63.07% (through holding companies) 2 Shares held by Sh. TPG Nambiar (through 7.20% holding companies) 3 Shares held by ICICI Trusteeship Services 9.30% 4 Shares hold by Overseas Companies including 20.43% M/s Inditel Holdings Ltd., Mauritius, M/s Deccan Asian Infra, Mauritius, M/s Aidtel Holdings, Mauritius, M/s South Asian Regional Fund and M/s CDC Financial Services Besides the equity shares, M/s BPL Communications Ltd. had also issued some preference shares of Rs. 100 each and NonConvertible Debentures (NCD) as per details mentioned below:
a) Companies held by Sh. Rajeev 200,500 preference shares Chandrasekhar
b) Companies held by Sh. TPG 25,15,000 preference shares Nambiar
c) M/s CDC Financial Services Ltd. 1,48,70,000 preference shares
d) ICICI Bank Ltd. 3 crore NCD of Rs. 100 each B. BPL Mobile Communication Ltd. (now M/s Loop Mobile India Ltd.): 74% equity shares held by : M/s BPL Communications Ltd.
26% equity shares held by : M/s French Telecom through M/s Dominance Holdings Ltd., Mauritius
12. The said companies had internal disputes, in view of which Shri Rajeev Chandrashekhar decided to sell the companies. The companies, if rendered litigation free, could CBI Vs. Ravi Kant Ruia and others Page 8 of 526 command a lot of value. During this period accused Sh. Ravi N. Ruia approached Mr Rajeev Chandrashekhar for buying out these companies. To ensure that this was a serious offer, Rs 20 crore were paid to erstwhile promoters (holding companies belonging to Sh. Rajeev Chandrashekhar) in two instalments of Rs 5 crore on 19.05.2004 and Rs 15 crore on 02.06.2004. That the aforesaid amount of Rs. 20 crore was sourced from M/s Essar Shipping Ltd. (Rs. 5 Crore) and M/s Essar Investments Ltd. on behalf of M/s Essar Teleholdings Ltd (Rs. 15 crore). It was projected that the deal was to assign these companies to a third player. It was also clear that the deal had to meet regulatory conditions of DoT and be compliant to the extant rules and guidelines. These negotiations followed a social announcement by accused Sh Ravi N. Ruia in May 2004 that Essar Group was buying the aforesaid BPL group companies. That at this point of time Essar Group already had an effective shareholding of 33% in pan India licensee company M/s Hutchison Essar Limited (HEL) or its subsidiary companies, through M/s Essar Teleholdings Ltd. and its associates. (However, later on clarified at the bar that HEL was not having any telecom licence for Tamil Nadu, Kerala and Maharashtra circles). After having entered into a deal with Mr Rajeev Chandrashekhar, for purchase of his stake in M/s BPL Communications Ltd through its subsidiaries M/s BPL Mobile Communications Ltd and BPL Mobile Cellular Ltd, the acquisition was completed in various stages during May, 2004 to July, 2005.
CBI Vs. Ravi Kant Ruia and others Page 9 of 52613. As per the Clause 1.3 of the CMTS license conditions, Essar Group companies, directly or through associates, could not acquire more than 10% equity in the operating companies. Accordingly, the promoters of the Essar Group, in league with Mrs Kiran Khaitan w/o Sh. I. P. Khaitan (sister of Sh Ravi N Ruia) & Sh. I.P. Khaitan (brotherinlaw of Ruias), a Dubai based NRI, designed a scheme to acquire M/s BPL Communications Ltd. through M/s Santa Trading Pvt. Ltd. and other Mauritius based foreign companies, wherein equity was purportedly held by Mrs Kiran Khaitan and Sh. I P Khaitan, to circumvent the restrictive clause 1.3 of the CMTS License. Sh. Vikash Saraf facilitated the aforesaid persons in the said acquisitions. A Board meeting of M/s Essar Teleholdings Ltd. (ETHL), attended by Sh. Vikash Saraf, was held on 15 October, 2004 wherein resolution to this effect was passed by the board.
14. In the board meeting of M/s Essar Teleholdings Ltd (ETHL) held on 15 October, 2004 and chaired by Sh. Vikash Saraf, it was resolved that ETHL will buy 9.99% equity of M/s BPL Mobile Communications Ltd. for Rs. 120 crore (USD 26 million) from M/s Asia Pacific Systems Ltd. (out of 26% proposed to be purchased by it from France Telecom). It is alleged that in October, 2004 itself M/s Essar Teleholdings Ltd. paid an advance of US$26million to M/s Asia Pacific Systems Ltd. (claimed to be a company owned by Mr. I.P. Khaitan), to enable M/s Essar Teleholdings Ltd. to purchase 9.9% equity of M/s BPL Mobile Communications Ltd. from M/s Asia Pacific Systems Ltd., out of 26% shares of M/s BPL Mobile CBI Vs. Ravi Kant Ruia and others Page 10 of 526 Communications Ltd. to be acquired by it (M/s Asia Pacific Systems Ltd.) from M/s Dominance Holdings Ltd. Subsequently on 04th December, 2004 M/s Dominance Holdings Ltd., which held 26% shares in M/s BPL Mobile Communications Ltd., sold its entire stake to M/s Asia Pacific Systems Ltd. for USD 20 million (approx. Rs.92.3 crore). The aforesaid facts indicate that M/s Essar Teleholdings Ltd. funded the entire acquisition of 26% equity shares of M/s BPL Mobile Communications Ltd. from and held by M/s Dominance Holdings Ltd. The aforesaid transactions were designed to park 16.01% equity of M/s BPL Mobile Communications Ltd. and an amount of US$6 million in the aforesaid company claimed to belong to accused I P Khaitan. By this set of transactions M/s Essar Teleholdings Ltd., which already held substantial equity in M/s Hutchison Essar Ltd. or its subsidiary companies having pan India UAS Licenses, the UASL guidelines were bypassed by creating a corporate veil because documents indicated only 9.9% equity held by ETHL while actually entire 26% equity acquisition was funded by it.
15. Accordingly on 04th December, 2004, M/s Asia Pacific Systems Ltd. transferred 86,05,304 equity shares of M/s BPL Mobile Communications Ltd. to M/s Essar Teleholdings Ltd. Remaining 13790882 equity shares of M/s BPL Mobile Communications Ltd. comprising 16.01% stake were transferred by M/s Asia Pacific Systems Ltd to M/s Capital Global Limited, Mauritius on 31st October, 2005. It may be pointed out that being a substantial effective share holder in a Telecom Licensee company i.e. M/s Hutchison Essar Ltd. (HEL), ETHL could not CBI Vs. Ravi Kant Ruia and others Page 11 of 526 openly acquire more than 9.99% shares in another licensee company as per the guidelines.
16. M/s Santa Trading Pvt. Ltd., earlier known as M/s Atul Bhagwat Trading Pvt. Ltd., was acquired by Mrs. Kiran Khaitan by way of gift from her relatives Rishi and Saket Agarwal, who had business association with Essar group and no business association with accused I P Khaitan or his group companies, on 30th April 2005. This company was used to acquire shares of M/s BPL Communications Ltd from Indian companies including those owned by holding companies of Sh. Rajeev Chandrashekhar/ Shri T.P.G. Nambiar, ICICI Bank / ICICI Trusteeship, etc. Sh. S. Shankarnarayanan and Sh. B. Shivakumar, both Essar Group employees, were the directors of M/s Santa Trading Pvt. Ltd. during 02.09.2004 to 02.06.2005, when most of the agreements were entered into by Essar group with erstwhile BPL group for acquisition of shares of M/s BPL Communications and M/s BPL Mobile Communications Ltd., which were assigned to M/s Santa Trading Pvt. Ltd. Directors of M/s Santa Trading Pvt. Ltd. thereafter were Mr I.P. Khaitan, Ms. Kiran Khaitan & Ms. Sangeeta Lakhi.
17. M/s BPL Communications Ltd. held 100% of M/s BPL Mobile Cellular Ltd. having three Telecom licenses of Kerala, Tamil Nadu & Maharashtra. As indicated earlier M/s BPL Communications Ltd also held 74% of M/s BPL Mobile Communications Ltd. Shares of M/s BPL Communications Ltd were transferred by the erstwhile promoters (Mr. Rajeev Chandrashekhar and Mr. TPG Nambiar group) to new buyers as CBI Vs. Ravi Kant Ruia and others Page 12 of 526 per details mentioned below: i. Sh Rajeev Chandrashekhar group held 63.07% which was purchased for Rs. 304 Crore by Essar Group in the name of M/s Santa Trading Pvt. Ltd. For this amount, agreements were signed by erstwhile holding companies on behalf of Rajeev Chandrashekhar group during 19th May 2004 to 16th July, 2005 with M/s Essar Teleholdings Ltd. The details of the said shareholders are as mentioned below: Agreement Between No of Shares Consideration Dated Amount 16 March, 2005 th M/s Tayana 19,97,98,770 Rs. 69 crore Consult Pvt. Ltd. shares and M/s Essar representing (Revised from Amendment Teleholdings 16.32% earlier amount Agreement Ltd.(ETHL) of Rs.65 crore) dated 19,91,98,770 15.07.2005 M/s Tayana Shares & Consult Pvt. Ltd. 2,00,500 and M/s Santa Preference Trading Pvt. Shares Ltd.(STPL) 16th March, 2005 M/s Epsilon 4,50,07,284 Rs. 15 crore Advisers Pvt. shares Ltd. and M/s representing Essar 3.69% Teleholdings Ltd.(ETHL) 16th March, 2005 M/s Vectra 2,60,92,814 Rs. 70 crore Holdings Pvt. shares Ltd., Mr. Rajiv representing Chandrasekhar, 2.14% M/s Essar Teleholdings Ltd.(ETHL) and M/s BPL Communication s Ltd.
16th March, 2005 M/s Coimbatore 14,97,69,241 Rs. 38.50 crore
Cablenet Pvt. shares
Ltd. and M/s representing
Essar 12.26%
Teleholdings
CBI Vs. Ravi Kant Ruia and others Page 13 of 526
Ltd.(ETHL)
15 July, 2005
th
M/s Epsilon 35 crore shares Rs. 111.50
Advisers Pvt. representing crore
Ltd. and M/s 28.66%
Santa Trading (disputed
Pvt. Ltd. holdings)
Total Rs. 304 crore
The details of the sources of funds for these transactions are as mentioned below: a. Rs. 20 crore were paid by Essar group as advance as mentioned before and were paid in two instalments of Rs 5 crore on 19.05.2004 and Rs 15 crore on 02.06.2004. The aforesaid amount of Rs. 20 crore were sourced from M/s Essar Shipping Ltd. and M/s Essar Investments Ltd.
b. On 18 March 2005, Rs. 30 crore was paid to holding companies of Mr. Rajeev Chandrashekhar group from the accounts of M/s Essar Investments Ltd. through M/s Essar Teleholdings Ltd. in three separate transactions of Rs. 5 crore, Rs. 5 crore and Rs. 20 crore. It is alleged that the sale consideration of Rs. 304 crore has been paid by Essar group, out of which a sum of Rs. 50 crore had been paid by various Essar Group companies as advance before and at the time of signing of agreements.
It is alleged that the said amount was sourced by ETHL from M/s Essar Investment Ltd (EIL) and M/s Essar Shipping Ltd. All the aforesaid agreements were signed by Sh Vikash Saraf on behalf of ETHL. The terms and CBI Vs. Ravi Kant Ruia and others Page 14 of 526 conditions of the agreement included right to assign the share purchase agreement to third party. As such the agreement was assigned by ETHL to M/s Santa Trading Pvt. Ltd. After board resolution, the offer of assignment was accepted by STPL and the shares were transferred directly to STPL. However, there is no agreement between ETHL and STPL for this transfer of shares. These were assigned at par in a designed manner. ETHL wrote a letter to BPL for assigning these shares to STPL with a copy to STPL which was accepted in a Board resolution of STPL.
On 15 July, 2005 STPL issued NCDs worth Rs. 50 crore to M/s Essar Investments Ltd. and book entries were made as STPL having returned Rs. 50 crore invested by Essar group. The aforesaid transactions were routed through M/s Oblique Trading Pvt. Ltd, a company owned by Saket Aggarwal, son of another sister of accused Ravi Ruia.
c. Remaining amount of Rs 254 crore was paid by M/s Essar Teleholdings Ltd (ETHL) to STPL in July 2005 against which M/s STPL issued 2.54 crore Non Convertible Optionally Redeemable Unsecured Debentures (NCD) of Rs. 100 each to ETHL for a total sum of Rs. 254 crore. In the board meeting of ETHL held on 13 July, 2005 which was attended by Sh. Vikash Saraf and others, the offer of STPL was accepted and it was resolved to invest Rs. 254 crore in the said NCDs of STPL. After receipt of this amount, the entire consideration of Rs. 254 crore was CBI Vs. Ravi Kant Ruia and others Page 15 of 526 paid by STPL to the sellers. Thus it was just a paper adjustment and the entire investment to buy out Sh Rajeev Chandrashekhar stake came from Essar Group. That Shri Rajeev Chandrashekhar, as part of the agreement for a clean sale against a deferred payments scheme, invested entire amount of Rs.254 crore accumulated in his company M/s Jupitor Capital Advisors into ETHL which was later returned by ETHL to M/s Jupitor Capital Advisors along with an interest of Rs. 11.115 crore. This amount was received by ETHL out of the sale consideration of M/s BPL Mobile Cellular Ltd. received by it from M/s Hutchison Essar Ltd. As allotment of 35 crore shares to M/s Epsilon Advisors Pvt. Ltd was disputed, the agreement for these shares could not be executed with ETHL. It was signed later on 15 July, 2005, directly between STPL and M/s Epsilon Advisors Pvt. Ltd. The agreement was signed by Sh. Rohit Dave on behalf of STPL.
ii. It is alleged that earlier on 15 October 2004, ETHL board discussed and resolved that wherever possible, and permissible under the regulations, ETHL should also examine purchase of shares / debenture / preference shares of BPL Group companies for itself. Thereafter, as per the resolution of the board, which was chaired by Sh. Vikash Saraf, ETHL purchased the entire equity shares from Nambiar group (which constituted less than 10% of CBI Vs. Ravi Kant Ruia and others Page 16 of 526 total shares of M/s BPL Communications Ltd), entire debentures/preference shares held by ICICI Bank Ltd., TPG Nambiar Group and M/s Black Lion Ltd., Mauritius. The purchase was made during March 2005 to June 2005 as per details mentioned below: Security Seller Date of Transaction Quantity Amount (Rs.) Payment Detail Board Date Meeting Equity M/s TPG Jun 8,05 Jul 15,05 88,477,418 99,84,85,358 Jul 15,05 Shares Nambiar group Preference M/s TPG Jun 8,05 Jul 15,05 25,15,000 25,15,00,000 Jul 15,05 Shares Nambiar group Preference M/s Black Mar 18,05 Jul 26,05 1,48,70,000 133,83,00,000 Aug 5,05 Shares Lion Ltd.
Non ICICI Mar 18,05 Mar 28,05 3,00,00,000 410,00,00,000 March 28, 05: 46 Cr
convertible Bank Ltd. Jun 30, 05: 228 Cr
Debentures Nov 23, 200625 Cr
Nov 30,0691. 5 Cr
Nov 30,0619. 5 Cr
Total Consideration Paid 668,82,85,358
That the 7.20% equity and preference shares held by Sh. TPG Nambiar Group were bought for Rs 125 crore by ETHL, for which the entire payment was made through Essar Group of companies. This 7.20% equity of the holding company M/s BPL Communications Ltd, which held 74% equity of the operative company M/s BPL Mobile Communications Ltd, amounted to proportionate holding of 7.2x74, i.e. 5.3% holding of the operative company, was in violation of the UAS license condition as the cumulative holding became above 15.2%, much above the permitted 10% equity. However, this was subsequently assigned to STPL and STPL issued NCDs of the same value to Essar. That the share purchase agreement for the CBI Vs. Ravi Kant Ruia and others Page 17 of 526 aforesaid acquisition was signed after meetings of Sh Ravi Ruia with sellers and subsequent negotiations were followed up by Sh Vikash Saraf. The said agreement dated 15 July 2005 was signed by Sh. Amit Gupta, an employee of Essar group on behalf of ETHL and by Sh TPG Nambiar on behalf of sellers. For making payment of Rs. 124.99 crore against aforesaid shares to the Nambiar Group, ETHL availed a loan facility of Rs. 350 crore from India Global Competitive Fund (managed by SREI Venture Capital Ltd.). As per the letter dated 15 July 2005 written by Sh. Vikash Saraf as authorized signatory, the sales consideration was directly transferred to the accounts of the sellers and the remaining loan amount was transferred to ETHL.
iii. ICICI Bank held NCDs worth Rs 410 crore of M/s BPL Communications Ltd. which were purchased by M/s Essar Teleholdings Ltd (ETHL). Negotiations regarding this were held between the representatives of ICICI Bank Ltd. (headed by Sh. P. Suresh, AGM, ICICI) and Sh. Vikash Saraf on behalf of M/s Essar Teleholdings Ltd (ETHL). After negotiations ICICI Bank agreed to sell the NCDs for a total consideration of Rs. 410 crore. Agreement for Sale was executed on 28 March 2005 which was signed by Sh. Amit Gupta on behalf of ETHL. The total consideration of Rs. 410 crore was paid to ICICI over a period of time in five instalments and was sourced from various Essar Group companies as shown below: CBI Vs. Ravi Kant Ruia and others Page 18 of 526 Date Paid by Bank Amount Source of funds 28th March, 2005 M/s Essar ABN Amro 46 crore M/s Essar Teleholdings Ltd. Bank Investment Ltd.
30th June, 2005 M/s Essar ABN Amro 228 crore M/s Imperial
Teleholdings Ltd. Bank consultant &
Securities Pvt Ltd.
23rd November, M/s ETHL Global State Bank of 25 crore M/s Essar Steel
2006 Capital Mysore Ltd.
30th November, M/s Girishan ING Vysya 91.5 M/s Essar
2006 Investment Pvt. bank crore Investment Ltd.
Ltd.
30th November, M/s ETHL Global State Bank of 19.5 M/s Essar
2006 Capital Mysore crore Investment Ltd.
iv. ICICI Bank Ltd. had sanctioned various loan facilities to BPL Group and the liabilities to the tune of Rs. 523 Crore had accrued on BPL as on 31st March, 2003. Against the loan, the BPL Group had pledged certain equity of M/s BPL Communications Ltd (held by Nambiar Group) with the bank. The bank invoked the said equity shares towards the liabilities, when the loans became bad, and sold them to ICICI Trusteeship for Rs. 80 crore. ICICI trusteeship in turn sold them to STPL at par i.e. for Rs. 80 crore. All the negotiations in this regard were held by ICICI Bank Ltd. and M/s ICICI Trusteeship merely acted as an agent for transfer of the shares. Agreement for Sale was executed on 27th June, 2006 which was signed by accused Mrs Kiran Khaitan on behalf of STPL. The payment was made by STPL to ICICI Trusteeship in two instalments of Rs. 30 crore (received from M/s Essar Steel Ltd. out of HEL funds) and Rs 50 crore from Millennium Growth and Development Fund, created by Essar group Company and managed by M/s SREI Venture Capital Ltd. Against the said Rs 80 crore, STPL issued NCDs to the Essar group companies.
CBI Vs. Ravi Kant Ruia and others Page 19 of 526v. That 20.43% equity of M/s BPL Communications Ltd and few preference shares were held by Mauritius based companies, as per following details: Name of the Company Equity Shares Preference Shares M/s CDC Financial Services 3,69,74,507 1,48,70,00 (Mauritius) Ltd.
M/s South Asian Regional Fund 88,73,507 Nil M/s Deccan Asian Infrastructure 10,97,75,324 Nil (Mauritius) Inc(owned by AIG Asian Infrastructure Fund LP) M/s Aidtel Holdings (Mauritius) Inc 2,81,01,000 Nil (owned by M/s Asian Infrastructure Development Company Ltd).
M/s Inditel Holdings (through hold 6,57,33,662 Nil by different funds) That 3.76% equity and the preference shares held by M/s CDC Financial Services (Mauritius) Ltd. & M/s South Asia Regional Fund were purchased by M/s Black Lion Ltd, Mauritius, purportedly beneficially owned by Mr IP Khaitan, for US $ 18.52 million (US$ 1.857 million towards preference shares held by M/s CDC Financial Services Limited). That the aforesaid preference shares were purchased by M/s Essar Teleholdings Ltd. from M/s Black Lion Ltd. for Rs. 133.83 crore (amounting to US$ 30.758 million), leaving the 3.76% equity for free with Mr. I. P. Khaitan held company and an excess of US$ 12.24 million after considering the entire stake purchase by M/s Black Lion Ltd. These funds were sourced from M/s Essar Investment Ltd. and M/s Essar Power Ltd. Negotiations on behalf of ETHL were held by Sh. Vikash Saraf purportedly with Sh. IP Khaitan, of M/s Black Lion Ltd. After CBI Vs. Ravi Kant Ruia and others Page 20 of 526 negotiations, share purchase agreement was signed on 26 July 2005 by Sh. Amit Gupta on behalf of ETHL. The remaining 16.6% equity held by M/s Deccan Asian Infrastructure (Mauritius) Inc, Mauritius; M/s Aidtel Holdings (Mauritius) Inc and M/s Inditel Holdings, Mauritius was bought by M/s Capital Global Ltd purportedly owned by Sh IP Khaitan for US $ 48.1 million (US$ 8.533 million towards shares held by M/s Aidtel Holdings + US$ 19.063 million towards shares held by M/s Inditel Holdings + US$ 20.50 million towards shares held by M/s Deccan Asian Infrastructure). The source of the funds was purportedly from M/s Bluefield International Ltd., British Virgin Islands, claimed beneficially owned by Sh I P Khaitan.
18. In March 2005, Mr. I. P. Khaitan purportedly acquired two Mauritius based companies, that is, M/s Capital Global Limited (CGL) and M/s Black Lion Limited, for USD 2 each. As per the register of members of the company during the period 16.03.2005 to 23.03.2009, M/s Black Lion Ltd was earlier owned by M/s Tiger Nominees Ltd. Similarly, M/s Capital Global Ltd. was earlier held by M/s Tiger Nominees Ltd. and M/s Orchid Nominees Ltd. jointly. As per the certificate provided by M/s International Management (Mauritius) Ltd., M/s Tiger Nominee / M/s Orchid Nominee were holding the shares in their nominee capacity for and on behalf of Shri I.P. Khaitan as beneficiary.
19. It is alleged that the entire funding for 83.4% equity CBI Vs. Ravi Kant Ruia and others Page 21 of 526 and all other debt instruments was sourced from Essar Group of companies.
20. It is further alleged that M/s Essar Teleholdings Ltd. (through various Essar Group companies) paid a total sum of Rs 919 crore (excluding 133.83 crore paid to M/s Black Lion) to various sellers in India either directly or on behalf of STPL. Not all these payments were routed through STPL, which was projected as the company holding M/s BPL Communications Ltd. etc., and book entries were made showing these amount as investments by Essar group companies in M/s Santa Trading Pvt. Ltd. in NCDs issued by STPL to Essar group companies. It is alleged that these transactions were mere paper adjustments as the NCDs issued by Essar group to STPL were at minimal interest rates as compared to market rates.
21. By November, 2005, M/s Essar Teleholdings Ltd. / M/s Santa Trading Pvt. Ltd. had acquired most of the shares / debentures of M/s BPL Communications Ltd (holding company for BPL Mobile Communications Ltd and BPL Mobile Cellular Ltd) and M/s BPL Mobile Communications Ltd. Thereafter, the promoters and persons connected with M/s Essar Teleholdings Ltd. / M/s Santa Trading Pvt. Ltd. decided to sell the licensee companies i.e. M/s BPL Mobile Communications Ltd and M/s BPL Mobile Cellular Ltd., along with respective holding companies. As per M/s Essar Teleholdings Ltd.'s Board resolution dated 25.10.2004 the first right of refusal was to be offered to M/s Hutchison Essar Limited, which agreed to acquire the companies. During this time accused Sh Anshuman CBI Vs. Ravi Kant Ruia and others Page 22 of 526 Ruia was a director on Board of M/s BPL Mobile Communications Ltd as well as M/s Hutchison Essar Ltd. Negotiations with M/s Hutchison Essar Ltd. on behalf of M/s Essar Teleholdings Ltd. / M/s Santa Trading Pvt. Ltd. were held by Sh. Vikash Saraf, who also signed the agreements in this regard. After negotiations, following agreements were entered into with M/s Hutchison Essar Ltd.: i. Agreement dated 25.11.2005 between M/s Hutchison Essar Ltd., M/s BPL Communications Ltd and M/s BPL Mobile Cellular Ltd. for Rs. 1071 crore. However, due to delay in the payments, total amount of Rs. 1120 crore, inclusive of interest was paid by HEL.
ii. Agreement dated 23.12.2005 between M/s Hutchison Essar Ltd. and M/s BPL Mobile Communications Ltd, M/s BPL Communications Ltd (74%), together with M/s Capital Global Ltd (16.01% share) & ETHL (9.99%) for Rs. 1412 crore.
22. M/s BPL Mobile Cellular Ltd. which was holding three telecom licenses in Kerala, Tamil Nadu and Maharashtra, was successfully taken over by M/s Hutchison Essar Ltd. after payment of Rs. 1120 crore. However, since M/s Hutchison Essar Ltd. and M/s BPL Mobile Communications Ltd. both were holding mobile telephony licenses for the Bombay Circle, permission of DoT was required for merger of both these licenses. However, M/s Hutchison Essar Ltd. could not get the CBI Vs. Ravi Kant Ruia and others Page 23 of 526 requisite permission of merger from DoT within the agreed period till 31st March, 2006 and the validity of the agreement was extended to 31st July, 2006. The terms and conditions were also amended and consideration for M/s BPL Mobile Communications Ltd. was enhanced from Rs. 1412 crore to Rs. 1663 crore, of which Rs. 1617 crore had been paid by M/s Hutchison Essar Ltd. as advance.
23. Out of the aforesaid payments of Rs. 1120 Crore and Rs.1617 crore, to be paid by M/s Hutchison Essar Ltd. to M/s BPL Communications Ltd. / M/s Santa Trading Pvt. Ltd., an amount of Rs. 2737.25 crore (comprising of number of transactions Rs. 2265.11 crore paid to ETHL and remaining Rs. 472.14 crore as adjustment against rights issue of M/s Hutchison Essar Ltd. as subscribed by Essar group in it) was paid by it during October, 2005 to July, 2006 directly to M/s Essar Teleholdings Ltd. (ETHL), which was then transferred to M/s Essar Investments Ltd. In the books of accounts, however, these amount were shown as received by M/s Santa Trading Pvt. Ltd. and lent to M/s Essar Investments Ltd. against which M/s Essar Investments Ltd. issued Multiple Optionally Convertible Debentures (MOCD) of Rs.2421 crore to M/s BPL Communications Ltd. The remaining amount of Rs. 316 crore was reportedly paid by ETHL to M/s BPL Communications Ltd or to a third party on behalf of M/s BPL Communications Ltd. in tranches spread over a period of time from Aug 2005 to Feb, 2008.
24. That the aforementioned Multiple Optionally CBI Vs. Ravi Kant Ruia and others Page 24 of 526 Convertible Debentures (MOCDs) did not carry any interest, but the returns from the NCD were governed by a prescribed structure on redemption. As per the redemption options each Outstanding Debenture (the MOCD) would get converted into one 12% Cumulative Redeemable Preference Share (CRPS) of Rs. 100 each at the expiry of five years from the date of allotment (i.e. 21.09.2005). Till the expiry of 5 years M/s Essar Investments Ltd. had option to redeem the Multiple Optionally Convertible Debentures (MOCDs) at an amount as stated below:
From date of allotment Amount (Rs.) per debenture Period upto one year 100 Period exceeding one year upto two years 105 Period exceeding two year upto three years 110 Period exceeding three year upto four years 115 Period exceeding four year upto five years 120
25. It is alleged that Multiple Optionally Convertible Debentures (MOCDs) issued by Essar group to STPL said to be held by Khaitan group, prescribing a return of 20% over the period of four to five years (annual return less than 5%), were at a very minimal interest rate as compared to the market rates. It is important to note that a part of these funds was initially arranged by Essar group from M/s SREI Ventures Capital Ltd. at the interest rate of around 1314% p.a. and were then lent to M/s Santa Trading Pvt. Ltd. as Multiple Optionally Convertible Debentures (MOCDs) at the return of less than 5% per annum.
26. On 17th January, 2006, M/s BPL Communications Limited (later renamed as M/s Loop Mobile Holdings India Limited) and M/s Essar Teleholdings Limited transferred their CBI Vs. Ravi Kant Ruia and others Page 25 of 526 entire stake to M/s BPL Communication, a partnership firm as capital contribution. However, the shares continued to be held in the name of the companies (partners) as a firm cannot hold any share. This partnership firm was created by the promoters / persons / companies belonging to Essar group / M/s BPL Mobile Communications Ltd. / M/s BPL Communications Ltd. / M/s Santa Trading Pvt. Ltd. purportedly to avoid tax liability arising out of capital gains due to the aforesaid transfer of shares amongst various holding companies, on the pretext that firms engaged in the business of Telecom were exempted from such tax. However, such an arrangement was primarily done to protect the investments made by Essar group companies in the name of Khaitans in M/s BPL Mobile Communications Ltd and its holding companies. This structure ensured that Essar Group had two partners - M/s Karthick Financial Services Ltd & M/s Essar Investments Ltd against single M/s BPL Communications Ltd holding more than 90% capital contribution / shares but having less than 10% interest. Essar group, therefore, had majority in the partnership firm to influence any decisions.
27. It is pertinent to mention here that in a partnership firm the decisions are taken by the majority of the partners irrespective of the investments made by a partner. In the aforesaid structure of the partnership firm it is worth noting that even though the two Essar companies had little profit sharing portion, these would prevail upon the single partner on behalf of BPL, if considered a separate entity. Thus, though effectively controlling the minority stake, less than the CBI Vs. Ravi Kant Ruia and others Page 26 of 526 substantial stake, the formation of this partnership firm resulted into dual purpose - viz. keeping the direct equity of Essar group below 10% and still keeping the control over the company. Moreover, the partnership deed itself is a document suspected to have been altered, in view of the conspicuous shortcomings in the deed, as confirmed by GEQD expert during investigation.
28. M/s Hutchison Essar Ltd. applied for DoT approval to merge M/s BPL Mobile Communications Ltd. holding Mumbai circle license with itself for the Mumbai circle telecom operations. DoT examined the request. Share Purchase agreement between M/s BPL Mobile Communications Ltd, M/s Hutchison Essar Ltd. and others was signed with on 23.12.2005 which was amended in March 2006 extending its validity till 31 July 2006, as approval of DoT did not come till then. That M/s Hutchison Essar Ltd. could not obtain the requisite permission from DoT even within the extended period valid till 31 July 2006.
29. At this time the Share Purchase agreement of M/s BPL Mobile Communications Ltd was terminated by M/s BPL Mobile Communications Ltd / M/s BPL Communications Ltd, on 1 August 2006, although the DoT accorded the approval for merger on 11 August, 2006. However, the agreement was not honoured by M/s BPL Mobile Communications Ltd / M/s BPL Communications Ltd and the technical defence of M/s Hutchison Essar Ltd. having defaulted by 10 days was stuck to. M/s Hutchison Essar Ltd. had already given advance payment for the said takeover, which remained with M/s BPL CBI Vs. Ravi Kant Ruia and others Page 27 of 526 Communications Ltd. / M/s BPL Mobile Communications Ltd. / M/s Essar Teleholdings Ltd. / M/s Essar Investments Ltd. and the dispute regarding this takeover went to Hon'ble High Court of Bombay and the arbitration proceedings followed thereupon.
30. During the same time M/s Hutchison was planning to exit from the Joint venture M/s Hutchison Essar Limited and M/s Vodafone came in to purchase the stake of M/s Hutchison in the said joint venture. At this time Essar group planned to operate this Mumbai circle mobile telephony license in the name of M/s BPL Mobile Communications Ltd. as an independent operator in gross violation of UASL Guidelines dated 14.12.2005 under a corporate veil. The said license was operated by Essar group held M/s BPL Mobile Communications Ltd. till August, 2007 without being noticed by the regulator. The reason for not honouring the agreement for merger of M/s BPL Mobile Communications Ltd with Mumbai license of M/s Hutchison Essar Ltd. was in furtherance of the aforesaid plan of the Essar group to create an independent pan India telecom licensee company, which had escaped detection by the regulators. That Essar Group signed underwritten Put Option and Call Option agreements with M/s Vodafone to exit from the joint venture at a future date as per agreement signed in Aug 2007. As per the agreement Essar group had signed exit option agreements with Vodafone which was to be exercised between 3rd and 4th anniversaries of the starting date, i.e. August 2010 to July, 2011. This option has been exercised by Essar group recently.
CBI Vs. Ravi Kant Ruia and others Page 28 of 52631. It is alleged that after the termination of Agreements between M/s BPL Mobile Communications Ltd and M/s Hutchison Essar Limited regarding merger of Mumbai Circle Licenses, in August 2006, the accused persons belonging to Essar group, in conspiracy with Sh I P Khaitan and Ms. Kiran Khaitan, designed a plan to operate the said Telecom licensee company in Mumbai circle concealing the real owners and making it appear that Essar group did not have a substantial equity in it. Accused Ravi N. Ruia, Anshuman Ruia and Vikash Saraf, all belonging to Essar group, remained as directors on the board of M/s Hutchison Essar Ltd. during the entire relevant period i.e. 2004 to 2010 (during 20072010 it was renamed as M/s Vodafone Essar Ltd.) and were looking after the telecom interests of the Essar group in the joint venture and elsewhere. The said accused persons were also directors, one or more of them, in other subsidiary licensee companies of the said joint venture M/s Hutchison Essar Ltd. / M/s Vodafone Essar Ltd. during said period. In furtherance of this conspiracy Essar group's entire stake held in M/s BPL Mobile Communications Ltd. was transferred to M/s. Santa Trading Pvt. Ltd. in December, 2006. Accordingly, equity shares worth Rs.94.6 crore, preference shares worth Rs.173.8 crore and NCDs worth Rs.410 crore held by Essar group were transferred to STPL without any cash payment. However, book adjustments were made for such transfer by STPL for issuance of NCDs of equivalent amount to M/s Essar Teleholdings Ltd. The terms & conditions for the NCDs were similar to earlier NCDs issued by STPL to ETHL for CBI Vs. Ravi Kant Ruia and others Page 29 of 526 Rs. 254 crore in July, 2005. That NCDs issued by M/s Santa Trading Pvt. Ltd. were on a nominal effective interest rate of about 56% p.a. It is important to note that part of these funds was arranged by Essar group from SREI Ventures at the interest rate of around 1314% p.a. Accused persons, acting through Sh Vikash Saraf, in the board meeting dated 16 December 2006 of M/s Essar Teleholdings Ltd. gave effect to this. As authorized by the board of ETHL, negotiations in this regard were held by Sh. Vikash Saraf who was also Director of the company. ETHL continued to hold 9.99% share holding in M/s BPL Mobile Communications Ltd as these shares were the subject of arbitration with M/s Hutchison Essar Ltd. Accordingly following equity/NCDs held by ETHL were sold to STPL: Security Buyer Date of Sale Quantity Amount (Rs.) Payment Board Date Date Meeting Equity Shares Santa Dec 16, Dec 88,477,418 94,58,23,598 Issue of Trading Pvt. 06 2006 NCDs on Ltd. Dec 20,06 Preference Santa Dec 16, Dec 20, 1,73,85,000 173,85,00,000 Shares Trading Pvt. 06 2006 Ltd.
Non Santa Dec 16, Dec 20, 3,00,00,000 410,00,00,000
convertible Trading Pvt. 06 2006
Debentures Ltd.
Total Consideration Received 678,43,23,598
32. Apart from the aforesaid financial transactions, the design planned by the accused persons belonging to Essar group, in league with Sh I P Khaitan and Ms Kiran Khaitan, also included other changes in the management of the operating/ holding companies. These changes are summarized as mentioned below: CBI Vs. Ravi Kant Ruia and others Page 30 of 526 a. During JuneJuly, 2005 various persons belonging to Essar group joined the board of M/s BPL Mobile Communications Ltd. as directors which included Sh Vikash Saraf (Director of M/s Essar Teleholdings Ltd. and CEO, Essar Telecom Business Group), Sh Prem Rajani (Counsel of Essar group having received fee from Essar group and no such association with Khaitans/ BPL Communications etc.) and Sh. Anshuman Ruia (Promoter of Essar group). By March 2006 the said persons constituted the majority of the directors on board. In September 2006 Sh Ajay Madan, another employee of Essar group and CEO of M/s Essar Telecom Infrastructure Pvt. Ltd. joined the board as additional director. Later, in conspiracy with other accused persons and in furtherance of creating a complex web of holding companies with intention to eliminate chances of detection of obvious linkages with Essar group, Sh Anshuman Ruia resigned from the Board of directors of the company on 15th December, 2006.
b. Various persons belonging to Essar group, viz. Sh. Vikash Saraf, Sh. Ajay Madan, Sh. Amit Gupta, Sh. S. Subramaniam, Sh. T. Satishan, Pramod Saxena were appointed as authorized signatories in the bank accounts of M/s BPL Mobile Communications Ltd. from time to time, thereby exercising the control over finances of the said operating company. Accused Vikash Saraf was also authorized signatory of bank accounts of M/s Essar Teleholdings Ltd.
CBI Vs. Ravi Kant Ruia and others Page 31 of 52633. It is alleged that accused persons/ companies belonging to Essar Group, acting in league with Sh. I P Khaitan, Mrs. Kiran Khaitan and M/s Santa Trading Pvt. Ltd., successfully concealed the actual stake holders in a complex web of companies, as a result of which the purchase of M/s BPL Communications Ltd. and its subsidiaries, and operations of Mumbai license of M/s BPL Mobile Communications Ltd. by the said persons/ companies remained unquestioned from DoT. It is alleged that the accused persons in furtherance of the conspiracy decided to spread the geographical reach of the services provided by the company and apply for 21 new UAS Licenses for remaining 21 telecom circles.
34. It is alleged that applications for 21 new UAS Licenses were submitted on 3.9.2007 in the name of M/s Shippingstop Dot Com (India) Pvt. Ltd. It is further alleged that the applicant company was incorporated on March 12, 1997 as M/s Onchannel Software Pvt. Ltd. On August 16, 2000 it was renamed as M/s Shipping Stop Dot Com (India) Pvt. Ltd. Applications were filed for 21 UAS licenses in 21 telecom circles other than Mumbai service area. In the Mumbai service area, its holding company M/s BPL Mobile Communications Ltd. (now M/s Loop Mobile India Ltd.) was already operating a UAS License. Further, on 21.09.2007 its name was changed to M/s Loop Telecom Pvt. Ltd. In the year 2009, it was converted into a closely held public limited company i.e. M/s Loop Telecom Ltd.
35. M/s Shippingstop Dotcom (India) Pvt. Ltd. was an Essar Group company, when it had earlier submitted an CBI Vs. Ravi Kant Ruia and others Page 32 of 526 application dated 17.11.2005 for license for operation of National Long Distance (NLD) Service. The said application was submitted/ pursued in DoT by various Essar group officials including Sh. D. B. Sehgal, Shri B. K. Syngal, Shri Ajay Madan, Sh. Girish Sathe, etc. and the Administrative Office/ Corporate Office of the applicant company was mentioned as Essar House, 11, Keshavrao Khadye Marg, Mahalaxmi, Mumbai - 400 034, which is the office premises of Essar group companies. In the application it was also mentioned that M/s Karthick Financial Services Limited, an Essar group company, held 100% shares of the applicant company. On 06.12.2005 the company also amended its object clause in Memorandum of Association to provide for services or business of telecommunications including Cellular Mobile Telephone Services, Basic Services, etc. and to acknowledge and comply with Unified Access Service License agreement. The License agreement for NLD Service was signed on 18.9.2006 between the DoT (Licensor) and M/s Shippingstop Dot Com (India) Pvt. Ltd. acting through Shri D. B. Sehgal.
36. It is also alleged that similar facts also emerged regarding the application dated 30.11.2005 for license for operation of International Long Distance (ILD) Service submitted by M/s Shippingstop Dot Com (India) Pvt. Ltd. to DoT. In the said applications the email address has been furnished as '[email protected]' and Shri Ajay Madan, CEO has been designated as authorized person. The Letter of Intent for ILD License was issued by DoT on 14.06.2006. However, in CBI Vs. Ravi Kant Ruia and others Page 33 of 526 view of the number of extensions sought by the company for signing license, the license was not signed by DoT and the LOI was cancelled. M/s Shippingstop Dot Com (India) Pvt. Ltd. was represented in DoT through Shri D. B. Sehgal.
37. In the aforesaid applications, the applicant company furnished following details of the experience of the Promoters/ Partners/ Sister concerns: Sl. Partner / Promoter Operating Service Ownership No. From the Year 1 Hutchison Essar Telecom 1994 GSM in New Delhi 30.42% (effective Ltd. Ownership) owned by Essar Group 2 Hutchison Telecom East 1994 GSM in Kolkata 30.42% (effective Ltd. Ownership) owned by Essar Group 3 Aircel Digilink Ltd. 1997 GSM in UP(E), 30.42% (effective Rajasthan, Ownership) owned by Haryana Essar Group 4 Hutchison Essar South GSM in 4 circles & 30.42% effective Ltd. UAS license in 2 Ownership of Essar Group
38. In the aforesaid applications M/s Karthick Financial Services Limited is shown as the promoter of the applicant company. The names of Chairman/ Managing Director/ Directors of the applicant company are as under:
1. Shri G. K. Sathe, Chairman & Director
2. Shri Rajender Bohra, Director
3. Shri Madan Mundra, Director
39. This admittedly Essar group company, was used to apply for 21 new UAS Licenses. However, it was transferred to M/s BPL Communications Ltd. and M/s BPL Mobile Communications Ltd. just two days before the applications for UAS Licenses were submitted to DOT and its eligibility was achieved in a designed manner. That on 31st August 2007, 49 CBI Vs. Ravi Kant Ruia and others Page 34 of 526 lakh fresh equity shares of Rs. 10 each of M/s Shippingstop Dot Com (India) Pvt. Ltd. were issued to M/s BPL Communications Ltd. at a premium of Rs. 275 each. Against the said allotment a sum of Rs. 139.65 crore was received by M/s Shippingstop Dot Com (India) Pvt. Ltd. from M/s BPL Communications Ltd. It is also alleged that Rs. 140 crore was received by M/s BPL Communications Limited from M/s Essar Teleholdings Ltd. On 1st September, 2007, M/s Karthick Financial Services Ltd. sold 51,50,000 shares of M/s Shippingstop Dot Com (India) Pvt. Ltd. held by it to M/s BPL Mobile Communications Ltd. at par and 130 share held by it jointly with Sh. Girish Sathe to Sh. S Subramanian jointly with M/s BPL Mobile Communications Ltd., while very previous day the company's shares were issued to M/s BPL Communications Ltd. at a premium of Rs. 275 each, indicating that the Essar group, which held this company earlier, and the BPL group, to which this company was now transferred, were one and the same. These transactions were clearly not prudent business transactions, and were rather in the nature of adjustments & manipulations. On 1st September, 2007 itself M/s Shippingstop Dot Com (India) Pvt. Ltd. allotted 12 bonus shares for every share held by all shareholders. Accordingly, 5,88,00,000 bonus shares were allotted to M/s BPL Communications Ltd., 6,17,98,440 bonus shares were allotted to M/s BPL Mobile Communications Ltd and 1560 bonus shares were allotted to Sh. S. Subramaniam jointly with M/s BPL Mobile Communications Ltd. The share holding pattern of M/s Shippingstop Dot Com (India) Pvt. Ltd. after the aforesaid share transfers is as reflected below: Sl. No. NAME OF THE SHAREHOLDER No. OF SHARES ALLOTTED 1 BPL Communications Limited 58,800,000 CBI Vs. Ravi Kant Ruia and others Page 35 of 526 2 BPL Mobile Communications Limited 617,98,440 3 Mr. S. Subramanian jointly with M/s 1,560 BPL Mobile Communications Limited
40. That on the date of application of UAS Licenses, the funding of M/s Shippingstop Dot Com (India) Pvt. Ltd. for complying with the Paid up Capital and Authorised capital requirements was in fact received from M/s BPL Mobile Communications Ltd. and M/s BPL Communications Ltd. which in turn received the funds from M/s Essar Teleholdings Ltd. It is alleged that all the four Directors on Board of M/s Shippingstop Dot Com (India) Pvt. Ltd. were employees of Essar group or working under the direct control of persons connected with M/s Essar Teleholdings Ltd./ Essar Telecom Business Group.
41. The holding structure of M/s Shippingstop Dot Com (India) Pvt. Ltd. (now, M/s Loop Telecom Ltd.) as on the date of UASL Applications - 03.09.2007 is as mentioned in the below paragraph.
42. It is alleged that that as on date of applications M/s Shippingstop Dot Com (India) Pvt. Ltd. (later named as M/s Loop Telecom Ltd.) was held by M/s BPL Mobile Communications Ltd. (now named as M/s Loop Mobile India Ltd.) to an extent of 51%. M/s BPL Mobile Communications Ltd. in turn was controlled by M/s BPL Communication, a partnership firm. This partnership firm had three partners, namely, M/s BPL Mobile Communications Ltd. (95% profit sharing ratio), M/s Karthick Financial Services Ltd. (2% profit sharing ratio) and M/s Essar Investment Ltd. (3% profit sharing ratio). It would show that although 95% of profit sharing ratio was in favour of M/s BPL Mobile Communications Ltd., said to CBI Vs. Ravi Kant Ruia and others Page 36 of 526 be controlled by accused I.P. Khaitan, the other two partners belonged to Essar Group. As per Indian Partnership Act, the decisions in a partnership firm are to be taken by a majority of the partners, unless otherwise agreed to by the partners. As per the partnership deed dated 04.02.2006 between the aforesaid partners, M/s. Essar Investment Ltd. and M/s Karthik Financial Services Ltd. were to provide administrative support and M/s BPL Communications Ltd. was to provide managerial support, but it has not defined that the decisions will not be taken by the majority. It is alleged that Essar group, through M/s Essar Teleholdings Ltd. exercised full control over M/s Loop Telecom Ltd. through the aforesaid partnership firm.
43. It is alleged that Sh. S Subramaniam, the then CEO of M/s BPL Mobile Communications Ltd., who was appointed by accused Vikash Saraf as CEO and was reporting to him, worked as CEO of the aforesaid company during 01.08.2006 to June, 2008. Sh. Ajay Madan, who joined Essar group in 2004, functioned as CEO of M/s Essar Telecom Infrastructure Pvt. Ltd. (ETIPL) from 2006 to 2008. He was reporting to accused Vikash Saraf, then CEO of Essar Telecom Business Group. In June/ July 2007, accused Vikash Saraf informed the aforesaid Essar officials that a subsidiary company was being formed to make applications for UAS Licenses in all the remaining 21 telecom circles, other than Mumbai, where M/s BPL Mobile Communications Ltd. was already operating. Subsequently, it was informed that M/s Shippingstop Dot Com (India) Pvt. Ltd., an Essar group company, that held National Long Distance/ CBI Vs. Ravi Kant Ruia and others Page 37 of 526 International Long Distance Licenses was to be acquired by both M/s BPL Mobile Communications Ltd. and M/s BPL Communications Limited.
44. It is alleged that Sh. V. Ganeshan, Sh. Madan Mundhra and Sh. Girish Sathe, all employees of Essar Telecom Business Group and functioning under supervision of accused Vikash Saraf and promoters of Essar group, were the directors of M/s Shippingstop Dot Com (India) Pvt. Ltd. during period September, 2006 to July, 2007. In a board meeting of the company during July, 2007 the above mentioned directors decided to apply for UAS License to DoT. Subsequently, on instructions of accused Vikash Saraf, Sh. S. Subramaniam, Shri Ajay Madan and Ms. Sangeeta Lakhi were inducted to the Board of M/s Shippingstop Dot Com (India) Pvt. Ltd in a Board meeting dated 16.08.2007. As per the design of accused Vikash Saraf, who in turn was reporting to promoter directors of Essar group including accused Ravi N. Ruia and Anshuman Ruia, Sh. S. Subramaniam was to concentrate on the operations of M/s BPL Mobile Communication Ltd. and Shri Ajay Madan would be engaged in all the regulatory and technical work required for Shippingstop Dot Com (India) Pvt. Ltd. It was also decided by the accused persons that work on all financing for the license fee payments and guarantees required for DoT at the time of the application would also be done by a team from Essar.
45. It is alleged that during August/ September 2007, 130 shares (out of total of 51,50,000) shares issued by the company) held by Shri Girish Sathe jointly with M/s Karthick CBI Vs. Ravi Kant Ruia and others Page 38 of 526 Financial Services (the previous owners of M/s Shippingstop Dot Com (India) Private Limited) were transferred to Sh. S. Subramaniam jointly with M/s BPL Mobile Communications Ltd. Consequently, financing facilities were arranged by the Essar Finance team whose CFO at that time was Shri V.G. Raghavan. Corporate guarantees for the loan facilities sought by M/s Shippingstop Dot Com (India) Private Limited were given by M/s Essar Steel Limited and M/s Essar Power Limited.
46. It is alleged that accused Vikash Saraf, in conspiracy with promoters of Essar group including Ravi N. Ruia and Anshuman Ruia, asked following persons belonging to Essar group to assist in the process of making applications for UAS Licenses to DOT:
1. Sh. P. R. Karnik, posted as DGM (Transmission and Planning), M/s Essar Telecom Infrastructure Pvt. Ltd., Essar House, Mahalaxmi, Mumbai during 2006 to 2009.
2. Shri Ajay Madan, CEO of M/s Essar Telecom Infrastructure Pvt. Ltd. and later appointed additionally as Chairman and Director of M/s Shippingstop Dot Com (India) Pvt. Ltd.
3. Shri Amit Gupta, VicePresident, M/s Essar Teleholdings Ltd.
4. Shri Jayan D'souza, General Manager, M/s Essar Teleholdings Ltd.
5. Shri Anupam Gupta, Executive, M/s Essar Teleholdings Ltd.
6. Shri Durgesh Dingankar, Company Secretary of M/s CBI Vs. Ravi Kant Ruia and others Page 39 of 526 Shippingstop Dot Com (India) Pvt. Ltd.
47. It is alleged that Essar group was having an Essar Telecom Business Group which was looking into all telecom related companies/ projects/ investments of Essar group, which included M/s Essar Telecom Infrastructures Pvt. Ltd., M/s Mobile Store Ltd., M/s Essar Teleholdings Limited, M/s Essar Telecom Investments Limited, M/s Essar Communications Limited, Mauritius, and Essar Com Limited, Mauritius, M/s Vodafone Essar Ltd., etc. The affairs of the said Essar Telecom Business Group were being managed by S/ Shri Vikash Saraf, CEO, Amit Gupta, Ajay Madan and Rajiv Aggarwal. Later accused Vikash Saraf was appointed as Group President Strategy and M&A, of Essar Group, and continued to supervise Essar Telecom Business Group.
48. It is alleged that all the applications of M/s Shippingstop Dot Com (India) Private Limited were examined in DoT. DoT raised queries about the eligibility of the company. Accused Vikash Saraf, in conspiracy with accused Ravi N. Ruia, Anshuman Ruia, Ishwari Prasad Khaitan and Ms. Kiran Khaitan, knowing well that M/s BPL Mobile Communications Ltd. was fully owned/ controlled by Essar group under a complex corporate veil created by them, intentionally made false representation that M/s Shippingstop Dot Com (India) Private Limited was in compliance of 'substantial equity' clause of UASL Guidelines. The DoT officials, in this manner, were made to believe that Essar group was having less than 10% equity in M/s CBI Vs. Ravi Kant Ruia and others Page 40 of 526 Shippingstop Dot Com (India) Private Limited.
49. It is alleged that accused Vikash Saraf asked Sh. Amit Kumar Gupta to assist Shri Ajay Madan, CEO of M/s Essar Telecom Infrastructure Pvt. Ltd. and Director of M/s Shippingstop Dot Com (India) Private Limited in preparation of Financial Projections of the company for the applications. Shri P.R. Karnik of M/s Essar Telecom Infrastructure Pvt. Ltd. was in charge for putting together the applications. Sh. Amit Kumar Gupta asked Shri Jayan D'souza and Shri Anupam Kishore Gupta to help Shri P.R. Karnik in putting together the financial projections for the applications, who accordingly prepared the Business Plan Statements.
50. It is alleged that in furtherance of the criminal conspiracy with other accused persons, accused Vikash Saraf, the then CEO of Essar Telecom Business Group, asked Shri Ajay Madan, CEO, M/s Essar Telecom Infrastructure Pvt. Ltd., to oversee the work of M/s Shippingstop Dot Com (India) Private Limited project, including network planning, roll out planning, recruitment of personnel etc., apart from his normal work. He was also appointed on the board of both the operating companies of Loop group including M/s Shippingstop Dot Com (India) Private Limited, M/s BPL Mobile Communications Ltd. by accused Vikash Saraf. Policy decisions in respect of M/s Shippingstop Dot Com (India) Private Limited, including financial matters, applications and further operations were communicated by accused Vikash Saraf to board members, and as per these decisions, resolutions of M/s Shippingstop Dot Com CBI Vs. Ravi Kant Ruia and others Page 41 of 526 (India) Private Limited and its holding companies viz. M/s BPL Mobile Communications Ltd. and M/s BPL Communications Ltd. were passed by the respective Boards. That at times, accused Vikash Saraf used to remain present during such Board meetings informally. The operating office of M/s Essar Telecom Infrastructure Pvt. Ltd. was located at Essar Techno Park, LBS Marg, Kurla, Mumbai and Shri Ajay Madan was functioning from this office as Director of M/s Shippingstop Dot Com (India) Private Limited, too. It is alleged that most of the aforesaid important functionaries, including directors of said companies, did not even know either of accused I. P. Khaitan or Ms. Kiran Khaitan, or even heard about them being promoters of these companies.
51. It is alleged that Shri P.R. Karnik was made an authorized signatory of M/s Shippingstop Dot Com (India) Pvt. Ltd. in August 2007, admittedly an Essar Group Company. He submitted 21 applications for UAS Licenses to DoT, New Delhi on 3.9.2007 under the supervision of Shri Ajay Madan, CEO of M/s Essar Telecom Infrastructure Pvt. Ltd., who in turn was functioning under instruction of accused Vikash Saraf. These UAS License applications were for Andhra Pradesh, Assam, Bihar, Tamil Nadu, Delhi, Gujarat, Haryana, Himachal Pradesh, Jammu & Kashmir, Karnataka, Kerala, Kolkata, Madhya Pradesh, Maharashtra, Uttar Pradesh (West), NorthEast, Orissa, Punjab, Rajasthan, Uttar Pradesh (East) and West Bengal service areas. Other employees of Essar Group as mentioned above helped Shri P.R. Karnik in preparation of such applications and its CBI Vs. Ravi Kant Ruia and others Page 42 of 526 enclosures. It is alleged that accused Vikash Saraf, in conspiracy with accused Ravi N. Ruia, Anshuman Ruia, I.P. Khaitan and Kiran Khaitan, fraudulently created a corporate veil in the name of M/s BPL Mobile Communications Limited, M/s BPL Communications Limited and their complex holding company structure, to conceal the actual complete control over it by the Essar Group through M/s Essar Teleholdings Limited, and various employees of Essar Telecom Business Group, and dishonestly & fraudulently misled the aforesaid employees of Essar Group into believing that Essar Group was not holding substantial equity in the said applicant company and was in compliance of UASL Guidelines.
52. It is alleged that under such false belief Shri P.R. Karnik was to made to sign an undertaking to the effect that no single promoter company/ legal person, either directly or through its associates, has substantial equity holding in more than one licensee company in the same service area for the Access Services namely; Basic, Cellular and Unified Access Service where the substantial equity means 'an equity of 10 per cent or more'. This undertaking was part of the applications dated 3.9.2007 submitted to DoT on 06.09.2007 by Shri P.R. Karnik, with the help of regulatory office employees of Essar Group at New Delhi, on behalf of M/s Shippingstop Dot Com (India) Pvt. Ltd. However, as per requirements, a separate certificate under the signatures of the Company Secretary, regarding compliance of Clause 8 of the UASL Guidelines dated 14.12.2005 was not enclosed.
CBI Vs. Ravi Kant Ruia and others Page 43 of 52653. It is alleged that when this application was scrutinized by the DoT officials, absence of this certificate was listed as one of the discrepancies. The DoT officials also indicated that the company had not specifically indicated its promoters. Various shortcomings/ discrepancies indicated in the application of the company were communicated to it vide letter dated 10.12.2007 of the ADG (ASI), DoT.
54. In the meantime on 21.09.2007, the name of the applicant company was changed from M/s Shippingstop Dot Com (India) Pvt. Ltd. to M/s Loop Telecom Pvt. Ltd. In response to the letter dated 10.12.2007, a certificate dated 12.12.2007 signed by Shri Priyadarshi Siddhartha, Company Secretary, under instructions of accused Vikash Saraf, in conspiracy with accused Ravi N. Ruia, Anshuman Ruia, I.P. Khaitan and Ms. Kiran Khaitan, was submitted in DoT office. This certificate, however, was not exactly as per the language required as per the guidelines of DoT. This was highlighted by the DoT officials. Accordingly, another certificate dated 7.1.2008 was submitted by the applicant company under the signature of said Company Secretary. This was forwarded by Shri D.B. Sehgal, Authorised Signatory of the applicant company who was otherwise an employee of Essar Group and had been receiving the salary from M/s Essar Steel Ltd. during the period 2006 to 2010.
55. Even this certificate was not as per the requirement of DoT and accordingly another certificate dated 9.1.2008 was submitted by the company in the language required by the DoT as per the guidelines. Such acts of the applicant company to CBI Vs. Ravi Kant Ruia and others Page 44 of 526 circumvent the commitment desired under the clause 8 of the UASL Guidelines dated 14.12.2005, indicate fraudulent/ dishonest intention of the accused persons to cheat the DoT.
56. Shri Priyadarshi Siddhartha joined M/s BPL Mobile Communications Ltd. on 10.12.2007 only and was asked to sign this certificate the very next day, on 11.12.2007, by the concerned persons under the instructions of accused Vikash Saraf, in conspiracy with accused Ravi N. Ruia, Anshuman Ruia, I.P. Khaitan and Ms. Kiran Khaitan. Moreover, the statutory books of the company created under the corporate veil did not reflect the true picture and the company secretary submitted such a certificate under bonafide belief so created by accused persons.
57. On 10.1.2008, the DoT, believing that the company met the eligibility conditions including the clause 8 of the UASL Guidelines, allocated Letters of Intent to the applicant company. As per the Letters of Intent for the 21 service areas, M/s Loop Telecom Ltd. was required to pay an entry fee of Rs. 1454/ crore. This fee was paid to the DoT on 11.1.2008. That the aforesaid funds were entirely sourced by applicant company M/s Loop Telecom Ltd. from various companies belonging to Essar Group only. The details of such sources, as revealed during investigation, are mentioned below: a. Advance from M/s Essar Telecom Infrastructure Pvt. Ltd. (ETIPL) CBI Vs. Ravi Kant Ruia and others Page 45 of 526 M/s Essar Telecom infrastructures Ltd. paid an amount of Rs. 700/ crore to M/s Loop Telecom Pvt. Ltd. in the form of an advance towards an agreement entered into by it that, in the event of getting licenses and desired spectrum for providing cellular mobile services, M/s Loop Telecom Pvt. Ltd. will procure services relating to sharing of passive infrastructure and related operations/ maintenance from M/s Essar Infrastructure Ltd. only. It is alleged that ETIPL paid the aforesaid Rs. 700/ crore in the garb of a claim to lock in this customer and secure exclusive rights for providing passive infrastructure it had.
b. Loan of Rs.725 crore from State Bank of India M/s Loop Telecom Pvt. Ltd. approached State Bank of India for sanction of a term loan of Rs. 725 crore and nonfund based Bank guarantee for Rs. 812 crore. This case was processed by State Bank of India on the premises that M/s Loop telecom Pvt. Ltd. was Essar Group Company and accordingly this loan was sanctioned by State Bank of India to M/s Loop Telecom Pvt. Ltd. while treating it as a part of GroupEssar. It is alleged that such processing was based on various factors which included the corporate guarantee given by M/s Essar Shipping Limited, M/s Essar Steel Limited and M/s Essar Power Limited. Further, the matter on behalf of M/s Loop Telecom Pvt. Ltd. was CBI Vs. Ravi Kant Ruia and others Page 46 of 526 pursued and negotiated by Essar Group functionaries. The Annual Report of the company for the year 200607 submitted by it for the loan purpose also indicated its association with various companies and promoters of Essar Group. It is alleged that the bank officials while processing the loan observed that M/s Loop Telecom Pvt. Ltd., a company promoted by M/s BPL Mobile Communications Ltd. of the Essar group is a special purpose vehicle of the group to implement telecom business.
c. Advance of Rs.175 crore towards equity shares from ETHL Global Capital Ltd.
M/s ETHL Global Capital Ltd., an Essar group company, gave an advance of Rs.175 crore to M/s Loop Telecom Pvt. Ltd. as share application money for subscription of its equity shares subject to agreement on pricing of the shares and other terms of investment among the entire investors consortium and that investment being kept at 9.99% direct equity interest as per the terms and conditions of UASL guidelines. At the time when the LOIs were issued to M/s Loop Telecom Pvt. Ltd. Rs. 175 crore of the aforesaid Essar group company was lying with it as share application money. This amount of Rs. 175 crore as compared to the entire paid up capital of M/s Loop Telecom Pvt. Ltd. at Rs. 130.65 crore was a substantial amount. The CBI Vs. Ravi Kant Ruia and others Page 47 of 526 aforesaid facts clearly indicate that the share price was not known when the share application money was paid by said Essar group company and the agreement was arrived at in furtherance of the conspiracy to allot shares at a price so that its shareholding doesn't go beyond 9.99%. Even this agreement was in violation of the clause 8 of UASL Guidelines dated 14.12.2005 in view of the 9.99% equity already held by M/s Essar Teleholdings Ltd. in M/s BPL Mobile Communications Ltd., the holding company of M/s Loop Telecom Pvt. Ltd. That this amount was later refunded by M/s Loop Telecom Pvt. Ltd. and no equity was allotted.
58. Letters of Intent for 21 UAS Licenses to M/s Loop Telecom Pvt. Ltd. were complied with on 11.01.2008. Subsequently during 03.03.2008 to 05.03.2008 UAS License agreements for all the 21 service areas were signed by the DoT. Later scarce and valuable spectrum was allocated to M/s Loop Telecom Pvt. Ltd. on various dates as per dates mentioned below: Allocation of spectrum to Loop S. Name of Circle Date of Allocation No. 1 Tami Nadu (inclusive of Chennai) 22.04.2008 2 Orissa 24.04.2008 3 Kerala 15.05.2008 4 Andhra Pradesh 27.05.2008 5 Karnataka 30.05.2008 6 Madhya Pradesh 28.08.2008 7 Bihar 03.10.2008 8 Maharashtra 14.11.2008 9 Himachal Pradesh 04.12.2008 10 Haryana 04.12.2008 CBI Vs. Ravi Kant Ruia and others Page 48 of 526 11 Kolkata 05.12.2008 12 Assam 22.12.2008 13 North East 23.12.2008 14 Rajasthan 23.12.2008 15 Jammu & Kashmir 24.12.2008 16 Uttar Pradesh (West) 26.12.2008 17 West Bengal 09.01.2009 18 Uttar Pradesh (East) 21.01.2009 19 Gujarat 09.03.2009 20 Punjab 09.03.2009 21 Delhi Not allocated
59. Subsequently M/s Loop Telecom Pvt. Ltd. planned to meet roll out obligations for which it needed certain financial assistance from various banks. That Central Bank of India sanctioned a loan of Rs. 500 crore to it on 29.9.2009 on the basis of bank guarantee given by M/s Essar Global Limited, an Essar Group company. In the Board Resolution submitted by it along with bank guarantee so given by M/s Essar Global Limited to the Central Bank of India it was clearly mentioned that 'Loop is an associate of Essar Global Limited'.
60. M/s Loop Telecom Pvt. Ltd. also approached Federal Bank Limited which sanctioned a loan of Rs. 100 crore to it on 18.12.2009. It has come in evidence that this loan was also sanctioned on the basis of bank guarantee given by M/s Essar Global Limited to the bank. In the Board Resolution of M/s Essar Global Limited submitted by it to Federal Bank it was again mentioned that 'Loop is an associate of Essar Global Limited'.
61. M/s Loop Telecom Pvt. Ltd. had also approached SBI Capital Market Limited and LIC of India for loans of Rs. 400 crore and Rs. 600 crore respectively which was sanctioned on CBI Vs. Ravi Kant Ruia and others Page 49 of 526 31.12.2009 and 28.1.2010. Both these loans were sanctioned by the banks on the basis of bank guarantees given by M/s Essar Global Limited only.
62. It is alleged that many persons who were actually belonging to Essar group joined the board of M/s Loop Telecom Pvt. Ltd. even after it had been shown as transferred from Essar group to M/s BPL Mobile Communications Ltd. and M/s BPL Communications Ltd. on 01.09.2007. Among these persons one Sh. V Ganeshan, who has been an Essar group employee since 1995 till date, and was posted as Manager in M/s Essar Investments Ltd. in 2007. He was a director in M/s Loop Telecom Pvt. Ltd. since September, 2006 till 19.09.2008. Ms. Sangeeta Lakhi, another such director appointed since 16.08.2007, who was also a director in M/s Santa Trading Pvt. Ltd., M/s BPL Mobile Communications Ltd. & M/s BPL Communications Ltd., was in fact an advocate with M/s Prem Rajani & Associates and had long professional association with Essar Group through accused Vikash Saraf and no such association with Khaitans. Shri Ajay Madan, another Director of M/s Loop Telecom Pvt. Ltd. since 16.8.2007 till 4.3.2009 was also a Director in M/s BPL Mobile Communications Ltd. during 28.9.2006 to 16.12.2008. That Shri Ajay Madan was in fact a part of Essar Telecom Business Group since 1.12.2004 and later became CEO of M/s Essar Telecom Infrastructure Pvt. Ltd. from 2006 onwards and remained so till 31.1.2009, and that during this entire period he drew salary from Essar Group only.
63. Another Director appointed on 16.8.2007 in M/s CBI Vs. Ravi Kant Ruia and others Page 50 of 526 Loop Telecom Pvt. Ltd. was Shri S. Subramanian, CEO, M/s BPL Mobile Communications Ltd. who remained so till 2.6.2008. That he was appointed as CEO of the company on 1.8.2006 by Vikash Saraf, who himself was the CEO of Essar Telecom Business Group and a Director of M/s BPL Mobile Communications Ltd., and was supervising and appraising the functioning of Shri S. Subramaniam. Subsequently, in 2008 when accused Vikash Saraf got elevated as Group President Strategy and Mergers & Acquisition, of Essar Group, he appointed Shri S. Subramaniam as CEO of M/s Essar Telecom Business Group and appointed Shri Sanjeev Chachondia, the then CEO of M/s Essar Telecom Infrastructure Pvt. Ltd. as CEO of M/s BPL Mobile Communications Ltd.
64. It is alleged that during the period 16.8.2007 to 2.6.2008, when all applications were made by M/s Loop Telecom Pvt. Ltd. (erstwhile M/s Shippingstop Dot Com (India) Pvt. Ltd.), and UAS licenses obtained by it, the company had four Directors namely Shri V. Ganeshan, Smt. Sangeeta Lakhi, Shri Ajay Madan and Shri S. Subramaniam and two of them were full time employees of M/s Essar Group and the two were functioning under the instructions of accused Vikash Saraf and accused promoters of Essar Group. Most of the meetings during September, 2006 to September, 2008 were chaired by Sh V. Ganeshan, an Essar group employee. The composition of the Board of directors of the licensee company was, therefore, being controlled by accused Essar group promoters through M/s Essar Teleholdings Ltd. and accused Vikash Saraf. It is alleged that CBI Vs. Ravi Kant Ruia and others Page 51 of 526 substantial funds amounting to much more than the entire equity of M/s Loop Telecom Pvt. Ltd. were provided by accused persons belonging to Essar group through M/s Essar Teleholdings Ltd. and M/s Essar Investment Ltd., which were used by the applicant company towards share capital in name of holding front companies, share application money for M/s ETHL Global Capital Ltd. and entire entry fee paid by the applicant company to DoT. Essar group was, therefore, through M/s Essar Teleholdings Ltd. / M/s Essar Investment Ltd., holding more than half in nominal value of the share capital of M/s Loop Telecom Ltd., under a complex corporate veil, fraudulently created for the purpose. M/s Loop Telecom Ltd., therefore, was functioning as a subsidiary, and thereby an associate, of M/s Essar Teleholdings Ltd. under a complex corporate veil, fraudulently created for the purpose, by accused persons and companies. It is alleged that M/s Loop Telecom Pvt. Ltd. was in fact an alter ego / front of M/s Essar Teleholdings Ltd. / Essar group.
65. During the aforesaid period many persons who were actually belonging to Essar group were functioning on the board of M/s BPL Mobile Communications Ltd. too. Accused Vikash Saraf, who was actually CEO of Essar Telecom Business Group and later became CEO (Strategy and Merger & Acquisitions) of Essar Group, himself was a director in M/s BPL Mobile Communications Ltd. from February, 2005 to 200809. He was also a director in M/s Essar Teleholdings Ltd during the relevant period from 04.06.2004 to 13.08.2010. Sh Prem Rajani, another CBI Vs. Ravi Kant Ruia and others Page 52 of 526 such director appointed in February, 2005 was in fact an advocate with M/s Prem Rajani & Associates and had long professional association with Essar Group through accused Vikash Saraf and no such association with Khaitans. Ms. Sangeeta Lakhi, another such director appointed since 02.04.2007, who was also a director in M/s Santa Trading Pvt. Ltd., M/s BPL Communications Ltd. and M/s Loop Telecom Pvt. Ltd., was in fact an advocate with M/s Prem Rajani & Associates and had long professional association with Essar Group through accused Vikash Saraf and no such association with Khaitans. Shri Ajay Madan, another Director of M/s BPL Mobile Communications Ltd. since 28.09.2006 till 16.12.2008, was in fact a part of Essar Telecom Business Group since 1.12.2004 and later became CEO of M/s Essar Telecom Infrastructure Pvt. Ltd. in 2006 and remained so till 31.1.2009, and that during this entire period he drew salary from Essar Group only.
66. Accused Vikash Saraf (CEO of Essar Telecom Business Group), Shri Ajay Madan (CEO of Essar Telecom Infrastructure Pvt. Ltd.), Shri Amit Gupta (Vice President, Essar Investments Ltd. and Member of Essar Telecom Business Group), Shri N.B. Vyas (Company Secretary, M/s Essar Steel Ltd.) and Shri V. Ganeshan (an employee in M/s Essar Investment Ltd. / Essar Steel Ltd.) were the authorized signatories in various bank accounts of M/s Loop Telecom Pvt. Ltd. apart from Shri S. Subramaniam of M/s BPL Mobile Communications Ltd. and a Director of M/s Loop Telecom Pvt. Ltd. who was himself appointed by and reporting to accused CBI Vs. Ravi Kant Ruia and others Page 53 of 526 Vikash Saraf.
67. It is alleged that many board meetings of M/s Loop Telecom Pvt. Ltd. and M/s BPL Mobile Communications Ltd. during the period 2006 to 2009 were held at Essar House, Mahalaxmi, Mumbai, instead of the changed registered office of M/s Loop Telecom Ltd. and the address of M/s BPL Mobile Communications Ltd. both situated at Mahim, Mumbai.
68. It is alleged that searches were conducted at the office premises of M/s Loop Telecom Pvt. Ltd. wherein office copies of certain emails exchanged between the Essar Telecom Business Group (ETBG) officials and officials of Loop Telecom Pvt. Ltd. have been recovered. These facts establish the active involvement and influence of M/s Essar Telecom Business Group into the functioning of M/s Loop Telecom Pvt. Ltd. During search, a draft due diligence report of M/s J. Sagar Associates was also recovered from the premises of M/s Loop Telecom Pvt. Ltd. in Mumbai. In this report, various instances have been highlighted which indicate that M/s Loop Telecom Pvt. Ltd. is an associate of Essar Group in terms of Clause 8 of the UASL Guidelines and in terms of Accounting Standards 23 notified by Ministry of Corporate Affairs and Institute of Chartered Accountants of India (ICAI).
69. M/s Loop Telecom Pvt. Ltd. has since been renamed as M/s Loop Telecom Ltd. w.e.f 21.10.2009. M/s BPL Mobile Communications Ltd. has been renamed as M/s Loop Mobile India Ltd. w.e.f. 09.03.2009 and M/s BPL Communications Ltd. has since been renamed as M/s Loop Mobile Holdings India Ltd.
CBI Vs. Ravi Kant Ruia and others Page 54 of 526w.e.f. 21.04.2009.
70. After the accused persons had cheated the DoT and fraudulently obtained the Letters of Intent / UAS Licenses / valuable spectrum in furtherance of a conspiracy among themselves, several complaints were received by the DoT during 20082010 alleging that M/s Loop Telecom Ltd. was an Essar group company under a corporate veil and was thereby violating the clause 8 of UASL Guidelines dated 14.12.2005. In one such matter DoT referred the matter to Ministry of Corporate Affairs seeking to examine the matter and opine whether the given facts and circumstances made out a violation of the clause 8 of UASL Guidelines. The Deputy Director (Inspection), Ministry of Corporate Affairs, who examined the matter in detail concluded that the clause 8 of the UASL Guidelines had been violated. However, the Ministry of Corporate Affairs, instead of conveying such a definite opinion to DoT, chose to send a noncommittal vague report elaborating the significant control of Essar group over M/s Loop Telecom Pvt. Ltd. In the light of such a general report on facts, the DoT took a broad view of the matter and decided to wait for any fresh inputs for deciding the matter, even though many a concerned officers of DoT had recommended to issue Show Cause Notices to M/s Loop Telecom Ltd. for termination of UAS Licenses. In this manner the public servants belonging to Ministry of Corporate Affairs and DoT chose to take a broad view of this serious matter, despite there being strong suggestions of violation of the Clause 8 of UASL Guidelines CBI Vs. Ravi Kant Ruia and others Page 55 of 526 dated 14.12.2005. The public servants belonging to Ministry of Corporate Affairs and DoT even chose not to investigate the matter under provisions of the Companies Act and allowed the matter to rest.
71. It is further alleged that M/s Loop Telecom Ltd. made fraudulent UASL applications for 21 circles on 3.9.2007 by misrepresenting the fact that they met all the eligibility criteria including clause 8 of UASL guidelines. These fraudulent applications were accompanied by false certificates to the effect that the company met the conditions prescribed under clause 8 of UASL guidelines, thereby falsely claiming that the applicant company was not under any control / influence of any existing licensee and that competition would not be compromised if 21 licenses applied for are issued to it. The employees of Essar Group/ M/s Loop Telecom Ltd., under bonafide belief, signed these certificates on false assurance about correctness of the facts, given by accused Vikash Saraf, in conspiracy with promoters of Essar group viz. accused Ravi N. Ruia and accused Anshuman Ruia, and with complicity of accused I P Khaitan and Ms. Kiran Khaitan. Accused Ravi N. Ruia was a director of the M/s Essar Investment Ltd. from 10.12.1976 to 10.11.2008, during which period all the Essar group transactions with M/s Loop Telecom Ltd. and its holding companies, thereby fraudulently creating complex corporate veil, took place. Among the Essar Promoters the knowledge of the entire structuring of the corporate veil to hide the true identity of the company's stakeholders has come in respect of accused Ravi N. Ruia and CBI Vs. Ravi Kant Ruia and others Page 56 of 526 accused Anshuman Ruia. It is alleged that these two promoters and accused Vikash Saraf, all belonging to Essar group, remained as directors on the board of M/s Hutchison Essar Ltd. during the entire relevant period i.e. 2004 to 2010 (during 20072010 it was renamed as M/s Vodafone Essar Ltd.) and were looking after the telecom interests of the Essar group in the joint venture and elsewhere. The said accused persons were also directors, one or more of them, in other subsidiary licensee companies of the said joint venture M/s Hutchison Essar Ltd. / M/s Vodafone Essar Ltd. during said period. It is alleged that these two Essar promoters, while giving shape to the criminal conspiracy to cheat the DoT, Govt. of India, withdrew themselves from the role on record they had been playing in M/s Essar Investments Ltd. (accused Ravi Ruia, a director of M/s Essar Investment Ltd. resigned on 10.11.2008) and M/s Loop Mobile India Ltd. (accused Anshuma Ruia a director of M/s BPL Mobile Communications Ltd. / LMIL resigned in December, 2006). It is alleged that this fraudulent act was actually a result of the entire conspiracy to cheat the DoT through a fraudulent corporate veil, to hide the actual holding structure of M/s Loop Telecom Pvt. Ltd. and M/s Loop Mobile India Ltd. (erstwhile M/s BPL Mobile Communications Ltd.) which was committed through M/s Essar Teleholdings Ltd. It is alleged that said M/s Essar Teleholdings Ltd. which was holding substantial equity directly/ through associates in M/s Vodafone Essar Ltd., a company having various subsidiaries operating UAS Licenses in all 22 telecom service areas, was also holding CBI Vs. Ravi Kant Ruia and others Page 57 of 526 substantial equity in M/s Loop Telecom Ltd. and M/s Loop Mobile India Ltd. (erstwhile M/s BPL Mobile Communications Ltd.) under a corporate veil fraudulently created by the accused persons for this purpose. Evidence has also come to the effect that these two promoters of Essar group, viz. accused Ravi N. Ruia and accused Anshuman Ruia, were actively looking after the functioning of accused Vikash Saraf, who gave shape to the entire edifice of offence with complicity of accused I P Khaitan and Ms. Kiran Khaitan. Accused I P Khaitan and accused Ms. Kiran Khaitan wilfully participated in the entire conspiracy by becoming benami holders of M/s Loop Telecom Ltd. on behalf of the accused promoters of Essar group. M/s Loop Telecom Ltd. has been the beneficiary of the entire design to cheat DoT and M/s Loop Mobile India Ltd. (erstwhile M/s BPL Mobile Communications Ltd.), another telecom operator and also a substantial stake holder in M/s Loop Telecom Pvt. Limited, has also been a beneficiary of the same design (being stakeholder of the former). It is alleged that entry fee ought to have been indexed / revised by DoT by 3.5 times as Adjusted Gross Revenue per Mega Hertz of spectrum (AGR/MHz) had increased by 3.5 times during 200308. It is alleged that by paying an entry fee of Rs. 1455 crore, accused M/s Loop Telecom Ltd., in conspiracy with other accused persons, obtained 21 UAS Licenses worth Rs.5092 crore.
72. It is alleged that the aforesaid facts and circumstances constitute commission of offences, during 200708, punishable u/s 120B IPC r/w 420 of IPC, and CBI Vs. Ravi Kant Ruia and others Page 58 of 526 substantive offence u/s 420 of IPC, against accused persons, viz. Ravi N. Ruia, Anshuman Ruia, Vikash Saraf, I P Khaitan, Ms. Kiran Khaitan, M/s Loop Telecom Ltd. (erstwhile M/s Shippingstop Dot Com India Pvt. Ltd.), M/s Loop Mobile India Ltd. (erstwhile M/s BPL Mobile Communications Limited) and M/s Essar Teleholdings Ltd.
73. Hence, this case.
74. Accused were summoned and they appeared in the Court. Copies as required by Section 207 CrPC were supplied to them to their satisfaction.
75. Vide order dated 25.05.2012, charges punishable under Section 120B read with 420 IPC were framed, read over and explained to the accused to which they pleaded not guilty and claimed trial. Substantive charge under Section 420 IPC was also framed against Vikash Saraf to which he also pleaded not guilty.
76. In support of its case, prosecution has examined 95 witnesses.
77. PW 1 is Sh. Sumeet Rakesh Khanna, Manager (Operations), Firstrand Bank, Mumbai. He deposed that documents, Ex PW1/A1 to A12, pertaining to bank account of Essar Teleholdings Limited, were handed over by him to CBI on 28.05.2011 through seizure memo Ex. PW1/A. These documents include statement of account, cheques, resolution etc. passed by the company.
78. PW 2 is Sh. Rakesh Kumar, Section Supervisor, MTNL, New Delhi. He deposed that on 01.07.2011, he CBI Vs. Ravi Kant Ruia and others Page 59 of 526 attended CBI office and in his presence, CBI seized some documents through seizure memo Ex PW 2/A.
79. PW 3 is Sh. Vikas Jagannath Waingankar, Associate Vice President, HSBC Bank, Fort, Mumbai. He deposed that through seizure memo dated 30.05.2011, Ex PW 3/A, CBI seized documents relating to a current account of Essar Teleholdings Limited in the aforesaid branch of the bank and these documents relate to account opening form, specimen signatures, statement of account etc. and are Ex PW 3 /A1 to A8.
80. PW 4 is Sh. Anil Sharma, Assistant General Manager, Central Bank of India, Parliament Street, New Delhi. He deposed that through memo dated 09.06.2011, Ex PW 4/A, CBI seized documents relating to Essar Global Limited and the documents are Ex PW 4/A1 to A4.
81. PW 5 is Sh. Manoj Kumar Baranwal, Assistant Assessor and Collector, MCD, Delhi. He deposed that through letter dated 06.09.2011, Ex PW 5/A, documents, Ex PW 5/B to E, relating to licence deed of property No. 21, Firoz Gandhi Road, Lajpat Nagar, New Delhi, were sent to CBI.
82. PW 6 is Sebastian PT, Sr. Manager, Federal Bank, Corporate Branch, Mumbai. He deposed that through memo dated 31.05.2011, Ex PW 6/A, he handed over process note, Ex PW 6/B and sanction order, Ex PW 6/C, regarding loan of Rs. 100 crore given by the bank to Loop Telecom Limited to CBI. He deposed that the guarantee for loan was furnished by Essar Global Limited and for considering the loan, net worth of Essar CBI Vs. Ravi Kant Ruia and others Page 60 of 526 Global Limited was considered by the bank.
83. PW 7 is Sh. Ivan Tauro, an official of Standard Chartered Bank, MG Road Mumbai. He deposed that Santa Trading (P) Limited, Essar Teleholdings (P) Limited and Jupiter Capital Advisors (P) Limited were having their accounts with the aforesaid branch. He has proved ledger sheets of the bank account of Santa Trading (P) Limited for various periods as Ex PW 7/A1 to A35 and certificate attached therewith, Ex PW 7/A. He has also proved a ledger sheet of Essar Teleholdings Limited, Ex PW 7/D. He has also proved transfer of two amounts of Rs. 170.50 crore and Rs. 83.50 crore respectively, through cheques, Ex PW 7/B and 7/C, from the account of Essar Teleholdings Limited to Santa Trading (P) Limited. He has also proved five fund transfer instructions from STPL in favour of Coimbatore Cable Net (P) Limited, Vectra Holdings (P) Limited, Epsilon Advisors (P) Limited, Tayana Consultants (P) Limited and Epsilon Advisors (P) Limited, Ex PW 7/E1 to E5, and also deposed that these instructions were followed and advice was sent to client through Ex PW 7/E6 to E8. He has also proved two fund transfer instructions Ex PW 7/F and 7/G from Jupiter Capital Advisors (P) Limited for transferring funds in favour of Essar Teleholdings Limited. He deposed that these instructions were honoured and client was advised through Ex PW 7/H and 7/J.
84. PW 8 is Sh. Dinesh A. Patil, Assistant General Manager, State Bank of Mysore, Fort, Mumbai. He deposed that ETHL Global Capital Limited is having its account with the CBI Vs. Ravi Kant Ruia and others Page 61 of 526 aforesaid branch. He further deposed that through letter dated 25.05.2011, Ex PW 8/A, and memo dated 26.05.2011, Ex PW 8/B, documents, Ex PW 8/C to 8/G, mentioned therein, were handed over to CBI. He has also deposed about transfer of Rs. 25 crore from the account to ICICI Bank Limited.
85. PW 9 is Sh. Manangottu Parayil Haridas, General Manager, Central Bank of India, Corporate Finance Branch, Mumbai. He has deposed that credit facilities were granted by the branch to Loop Telecom Limited. He has further deposed that through letters dated 31.05.2011 and 01.06.2011, Ex PW 9/A and 9/B, documents, Ex PW 9/C to 9/S, relating to Loop Telecom Limited in connection with credit facilities granted to it, were handed over to CBI. He has further deposed that loan/ credit facilities granted to Loop Telecom Limited were guaranteed by Essar Global Limited.
86. PW 10 is Sh. Dharmadeep Mankar, Manager, SBI, Bhulabhai Desai Road branch, Mumbai. He has deposed that Telecom Tower and Infrastructure (P) Limited was having an account with the branch. He further deposed that the documents relating to this account, Ex PW 10/B to B16, were handed over to the CBI through memo dated 31.05.2011, Ex PW 10/A. He has proved transfer of Rs. 392.50 crore from this account to Loop Telecom (P) Limited on 10.01.2008, who was also having an account in the same branch, and transfer of Rs. 307.50 crore from this account again to Loop Telecom (P) Limited on 11.01.2008, but in an account in a different branch of the bank.
CBI Vs. Ravi Kant Ruia and others Page 62 of 52687. PW 11 is Sh. Arvind Shukla, Manager, Corporate Banking Branch, Federal Bank Limited, Mumbai. He deposed that this branch had advanced loan of Rs. 100 crore to Loop Telecom (P) Limited. He has deposed that documents, Ex PW 11/B to 11/F, relating to this loan, were handed over to CBI through memo dated 28.06.2011, Ex PW 11/A. He has further deposed that guarantee for the loan was furnished by Essar Global Limited.
88. PW 12 is Sh. Pawan Kumar, Assistant Vice President, Axis Bank, Fort, Mumbai. He has deposed that BPL Mobile Communication Limited is having an account with this branch. He further deposed that documents, Ex PW 12/B to 12/H6, relating to the account, were handed over to the CBI through memo dated 21.06.2011, Ex PW 12/A.
89. PW 13 is Sh. C. H. Narasimha Rao, General Manager, Corporate Accounts Branch, Mumbai. He deposed that Loop Telecom Limited was granted fund based and nonfund based financial assistance by the bank for entry fee and bank guarantee required for UAS licences. He has proved the documents, Ex PW 13/A to 13/Q, relating to these credit facilities. He further deposed that the guarantee for these credit facilities was furnished by Essar Power Limited/ Essar Steel Limited.
90. PW 14 is Sh. Adil Malia, Group President (HR), Essar Group, Mumbai. He has deposed that through letter dated 20.09.2011, Ex PW 14/A, he had sent documents, Ex PW 14/A1 to 14/A18, relating to Vikash Saraf, Group President, to CBI Vs. Ravi Kant Ruia and others Page 63 of 526 CBI. He further deposed that Shashi Ruia and Ravi Ruia are promoters of Essar group.
91. PW 15 is Sh. R. Kirthivasan, a Chartered Accountant, whose firm, audits accounts of both Essar group and Loop group. He has proved documents relating to STPL as well as Shipping Stop Dot Com (India) (P) Limited, Ex PW 15/A to 15/G.
92. PW 16 is Sh. Vidyadhar Vaman Chakradev, a practicing company secretary. He had issued certificates relating to Shipping Stop Dot Com (India) (P) Limited in connection with its UASL applications and has proved the same as Ex PW 16/A to 16/F. He further deposed that these certificates were issued by him on the asking of Sh. Girish Sathe, who works with Essar group.
93. PW 17 is Sh. N. D. S. Chari, Sr. Vice President, SREI Equipment Finance (P) Limited, Mumbai, which is an equipment finance company. He deposed that this company had extended loan facilities of Rs. 200 crore term loan to Loop Telecom Limited. He has proved the documents relating to this loan, Ex PW 17/A to 17/H. He further deposed that the guarantee for the aforesaid loan was furnished by Essar Global Limited.
94. PW 18 is Sh. Anand Sonthalia, Chief Executive Officer, Essar Projects (India) Limited, who was on the board of Essar Teleholdings Limited from 2000 to 2007. He has proved the minutes of various board meetings of the company and seizure thereof by the CBI. He has proved the minutes of various CBI Vs. Ravi Kant Ruia and others Page 64 of 526 board meetings, Ex PW 18/B to 18/D, and seizure thereof by CBI through memo, Ex PW 18/A. He also deposed that Ravi Kant Ruia and Shashi Kant Ruia are promoters of Essar group.
95. PW 19 is Sh. Venkat Govind Raghavan, Chief Financial Officer of Essar Group, since superannuated. He deposed that Vikash Saraf was head of Essar Telecom Business Group. He further deposed that on the asking of Vikash Saraf, he had assisted Loop Telecom (P) Limited in obtaining credit facilities from State Bank of India and Central Bank of India. He further deposed that the loan from SBI was guaranteed by Essar Power Limited and that of Central Bank of India was guaranteed by Essar Global Limited.
96. PW 20 is Sh. Umesh Chandra Das, a retired officer of State Bank of India, who was posted as Relationship Manager in Corporate Accounts Branch, Mumbai, in the year 2007. He has deposed about sanction of term loan of Rs. 725 crore and bank guarantee facility of Rs. 812 crore to Loop Telecom Limited. He has also deposed about documents, Ex PW 13/A to 13/F. He has further deposed that credit facilities were guaranteed by Essar Power Limited and comfort letter was given by Essar Shipping Limited.
97. PW 21 is Sh. Saket Aggarwal, son of sister of Ravi Kant Ruia and Kiran Khaitan. He has deposed that Santa Trading (P) Limited was gifted by him and his brother to Kiran Khaitan. He has proved documents relating to it and minutes of its board meetings, Ex PW 21/A to 21/C2. He also deposed that Oblique Trading (P) Limited was acquired from a chartered CBI Vs. Ravi Kant Ruia and others Page 65 of 526 accountant, in which his wife Ms. Archana Aggarwal and wife of his younger brother Ms. Anupama Aggarwal are directors. He further deposed that documents relating to this company, Ex PW 21/E to 21/G and mark PW 21/A and 21/B, were handed over by him to CBI through memo, Ex PW 21/D. He further deposed that an amount of Rs. 50 crore was routed through this company to STPL from Essar Construction Limited in July 2007 and subsequently, this amount was assigned by Oblique Trading (P) Limited to Essar Investments Limited. He has also proved the balance sheet of the company and Notes to account, Ex PW 21/H and 21/J.
98. PW 22 is Sh. Dhananjay Datar, Chief Financial Officer, ABG Shipyard. He deposed that this company has been promoted by Rishi Aggarwal and his family, who are related to promoters of Essar group. He further deposed that the company is engaged in ship building and repairing. He further deposed that ABG Shipyard buys steel from Essar Steel Limited and also repairs ships of Essar Shipping Limited, though the rates are fixed on competitive basis, both for steel as well as for repair.
99. PW 23 is Sh. Gaurav Gupta, formerly Branch Manager, ING Vysya Bank, Nariman Point, Mumbai. He deposed that Loop Mobile Holdings (India) Limited and Girishan Investments (P) Limited were having accounts in this branch. He further deposed that through letter, Ex PW 23/A, statement of account of Loop Mobile Holdings (India) Limited, Ex PW 23/B, and through letter Ex PW 23/C, original account opening form, Ex PW 23/D, and statement of account, Ex PW 23/E, of CBI Vs. Ravi Kant Ruia and others Page 66 of 526 Girishan Investments (P) Limited, were sent to CBI.
100. PW 24 is Sh. Anupam Goel, Manager, Royal Bank of Scotland, Delhi. He deposed that ABN Amro Bank has been taken over by Royal Bank of Scotland. He further deposed that through memos/ letter, Ex PW 24/A, 24/H, 24/M and 24/Q, he handed over to CBI documents relating to accounts of Loop Telecom (P) Limited, Essar Teleholdings Limited and Hutchison Max Telecom Limited, Ex PW 24/B to 24/G, 24/J to 24/L, 24/N to 24/O5, and 24/Q1 to 24/Q2. He further deposed that he also wrote a letter, Ex PW 24/P to CBI.
101. PW 25 is Sh. Nilamadhab Mishra, a former employee of Standard Chartered Bank. He deposed that through memo dated 09.06.2011, Ex PW 25/A, he handed over to the CBI, documents Ex PW 25/B to 25/E, relating to the account of Essar Investments Limited with American Express Bank, Mumbai, since merged with Standard Chartered Bank. He also deposed that through another memo, Ex PW 25/F, of even date, he also handed over to the CBI, documents Ex PW 25/G to 25/N, relating to the account of Santa Trading (P) Limited with American Express Bank, Mumbai. He further deposed that these documents were received in Delhi branch from Mumbai. He has also deposed about the transfer of money into/ from these two accounts.
102. PW 26 is Sh. Debabrata Pakrashi, Manager, Standard Chartered Bank. He deposed that through memo dated 29.07.2011, Ex PW 26/A, he handed over to CBI original cheque dated 30.06.2006, Ex PW 26/B, for an amount of Rs.
CBI Vs. Ravi Kant Ruia and others Page 67 of 52630,08,00,000/, issued in favour of Santa Trading (P) Limited by Essar Investments Limited from its account in American Express Bank and a copy of an internally generated credit advice, Ex PW 26/C, of the bank for an amount of Rs. 50 crore credited in the account of Santa Trading (P) Limited.
103. PW 27 is Sh. Mukesh Kumar Soni, former Vice President of SREI Infrastructure Finance Limited. He has also deposed about loan of Rs. 200 crore to Loop Telecom Limited as deposed to by PW 17. He also deposed that there are RBI Guidelines regarding exposure and in case of single borrower, the prescribed limit is 15% and in case of group entity, 25% of the net worth.
104. PW 28 is Sh. Satyendra Prakash, Additional Director General, Doordarshan, New Delhi. He has deposed that whenever a press release is issued by any ministry or department, the same is normally issued through PIB.
105. PW 29 is Sh. Ajit Nambiar. He has deposed about the sale of shares of TPG Nambiar group in BPL Communications Limited for an amount of Rs. 125 crore. He has proved the sharepurchase agreement, Ex PW 29/A, and its schedules, Ex PW 29/A1.
106. PW 30 is Sh. T. S. Suresh, Director (Legal), ICICI Venture Funds Management Company Limited, Bangalore. He deposed that BPL Communications Limited had availed a loan from ICICI Bank and for that an escrow was created to safeguard the interest of the bank. The promoters of BPL Communications Ltd. had placed part of their shares of the CBI Vs. Ravi Kant Ruia and others Page 68 of 526 company with the bank as security and these shares were kept with the escrow. He further deposed that when the company failed to repay the loan, the bank invoked escrow account and shares were transferred to ICICI Equity Fund, nominee of ICICI Bank and finally these shares were sold to Santa Trading (P) Limited. He further deposed that a certified copy of agreement entered into between ICICI Trusteeship Services Limited and STPL, Ex PW 30/B was sent by him to CBI through letter Ex PW 30/A. He also deposed that a certified copy of Power of Attorney, Ex PW 30/C, was also sent by him to CBI through letter Ex PW 30/D.
107. PW 31 is Sh. Ketan Modi, who used to look after corporate finance of Loop Telecom Limited. He has deposed about the loan availed by the company from State Bank of India and Federal Bank. He has proved an email, Ex PW 31/A, received from Federal Bank.
108. PW 32 is Sh. Harish Chandera, Senior Manager, Yes Bank. He deposed that through memo dated 01.08.2011, Ex PW 32/A, he handed over documents, Ex PW 32/B to B18 to CBI, pertaining to the account of BPL Mobile Communication Limited, at Worli Branch, Mumbai.
109. PW 33 is Sh. Rohit Dave, who was a junior lawyer with Rajani Associates, a law firm in Mumbai. He has proved share purchase agreement dated 15.07.2005, entered into between Epsilon Advisors (P) Limited and Santa Trading (P) Limited, Ex PW 33/A. He also sent a copy of his Form 16, Ex PW 33/B1 to CBI through letter, Ex PW 33/B. CBI Vs. Ravi Kant Ruia and others Page 69 of 526
110. PW 34 is Ms. Sangeeta Lakhi, also a lawyer with Rajani Associates. She was director on the board of Santa Trading (P) Limited, Loop Mobile Holding (India) Limited, Loop Mobile (India) Limited and Loop Telecom Limited. She has proved the minutes of various board meetings of these companies, Ex PW 34/A to E4.
111. PW 35 is Sh. Rupesh Kori, Manager, Essar Service (India) Limited. He deposed that through letter, Ex PW 35/A, he handed over copies of Form 16 of ten employees and income tax returns of six employees of Essar group, collectively Ex PW 35/B to CBI.
112. PW 36 is Sh. Pushkaraj V. Joshi, Company Secretary, Vodafone India Limited, formerly Vodafone Essar Limited. He deposed that through memo, Ex PW 36/A, he handed over to CBI shareholding pattern of the company and copies of documents filed with ROC, Ex PW 36/B to 36/E. He further deposed that through another memo, Ex PW 36/F, he handed over details of subsidiary companies and copies of various agreements to the CBI, Ex PW 36/G to 36/G4.
113. PW 37 is Sh. Subhash P. Chuga, Deputy Registrar, ROC, Mumbai. He deposed that all documents required to be filed by the companies with the ROC are filed online.
114. PW 38 is Sh. Vishwas S. Jadhav, Deputy Commissioner of Income Tax, Mumbai. He deposed that through memo, Ex PW 38/A, he handed over to CBI copies of income tax returns for the assessment years 200506 and 200607 of partnership firm Essar Teleholdings, now BPL CBI Vs. Ravi Kant Ruia and others Page 70 of 526 Communications, alongwith documents attached, Ex PW 38/B to 38/F.
115. PW 39 is Sh. Manohar Lal Birdi, Income Tax Officer, New Delhi. He deposed that through letter, Ex PW 39/A, he handed over to CBI income tax returns of Sh. Dharambir Sehgal for assessment years 200607 to 201011, Ex PW 39/B1 to 39/B5. He further deposed that through another letter, Ex PW 39/C, he handed over to CBI documents relating to TDS of Sh. Dharambir Sehgal for the assessment years 200910 and 201011, Ex PW 39/C1 and 39/C2.
116. PW 40 is Sh. Amit Kumar Gupta, former Vice President with Essar group. He has deposed about the bank accounts of BPL Mobile Communication Limited, Loop Telecom Limited and Telecom Tower and Infrastructure (P) Limited, documents sent to CBI on various occasions and purchase of shares of BPL Mobile group and their transfer to ETHL and their subsequent assignment to STPL and has proved documents in this regard, Ex PW 40/A to 40/T1.
117. PW 41 is Sh. Rajeev Chandrasekhar. He has deposed about the sale of his stake in BPL Communications Limited for an amount of Rs. 304 crore, on being approached by Ravi Ruia.
118. PW 42 is Sh. V. Ganesan, Deputy General Manager, Essar Global Services Limited. He was on the board of Shipping Stop Dot Com (India) (P) Limited. He has deposed about minutes of various board meetings of this company, its applications for UAS licences, grant of licences to it, admission into and retirement from firm BPL Communications and various CBI Vs. Ravi Kant Ruia and others Page 71 of 526 letters written to CBI for sending documents to it and has proved these documents as Ex PW 42/A to 42/J5.
119. PW 43 is Sh. Narottam B. Vyas, Director, Essar Investments Limited, which he joined as Company Secretary. He deposed that he was on the board of ETHL, Essar Investments Limited and Mobile Stores Limited. He has proved the minutes of various board meetings of the companies and has also deposed about partnership firm Essar Teleholdings, later on BPL Communications, letters sent to CBI on various occasions and investment into STPL and payment thereof. He has proved documents, Ex PW 43/A1 to 43/U1.
120. PW 44 is Ms. Vinita Thakur, Finance Manager, J. Sagar Associates, a law firm. She deposed that through letter, Ex PW 44/A, she handed over details of payment, Ex PW 44/B to 44/E4, received by the firm from Loop Telecom Limited and Essar Investments Limited and documents related thereto to CBI.
121. PW 45 is Sh. Harish Kapoor, Chief Regulatory Officer, Loop Telecom Limited. He has deposed about share holding pattern of the company, correspondence which took place with the DoT about the equity structure of the company and the explanation given to DoT in this regard. He has proved documents, Ex PW 45/A and B.
122. PW 46 is Sh. T. Sathisan, who joined BPL group as Senior Manager. He was also on the board of Loop Telecom Limited. He has proved minutes of various board meetings of this company, Ex PW 46/A to C19. He also used to attend CBI Vs. Ravi Kant Ruia and others Page 72 of 526 board meeting of Loop Mobile (India) Limited as a special invitee and has proved minutes of a few board meetings of this company also including, Ex PW 46/D and D1.
123. PW 47 is Sh. Anil Khubchandani, General Manager, Loop Telecom Limited. He deposed that through two seizure memos, Ex PW 47/E and 47/F and letter Ex PW 47/A, he handed over documents mentioned therein to the CBI.
124. PW 48 is Sh. P. Venugopal, an officer of Life Insurance Corporation, Mumbai. He has deposed that LIC had agreed to give loan to Loop Telecom (P) Limited but the same was not disbursed. He has further deposed that the documents relating to this loan were handed over by him to the CBI. He has further deposed that the loan was to be guaranteed by Essar Global Limited. He has proved documents, Ex PW 48/A to B29.
125. PW 49 is Sh. S. Shankarnarayanan. He was on the board of STPL, and some other companies of Essar group. He has proved minutes of a few board meetings of STPL, Ex PW 49/A to C.
126. PW 50 is Sh. Shivaram Singaravelu, an official of Essar group. He has deposed about admission deed dated 04.02.2006 entered into between Essar Teleholdings Limited, Karthik Financial Services Limited, BPL Communications Limited and Essar Investments Limited, Ex PW 40/E. He further deposed that he is signatory to this deed, though some pages do not bear his signatures.
127. PW 51 is Sh. S. V. Venkatesan, Group Director CBI Vs. Ravi Kant Ruia and others Page 73 of 526 (Finance), Essar Group. He was also on the board of some Essar group companies including Essar Teleholdings Limited, Karthik Financial Services Limited, Essar Steel Limited, Essar Investments Limited etc. He has deposed about the board meetings of Essar Teleholdings Limited, Karthik Financial Services Limited and Essar Investments Limited and has proved minutes of the board meetings of these companies. He also deposed that he was also authorized signatory for operating bank accounts of Essar Teleholdings Limited and Essar Investments Limited. He has proved minutes, Ex PW 51/A and 51/A1 to A29.
128. PW 52 is Sh. Sandip Basu, General Manager (Finance), BPL Mobile Group. He deposed that on numerous occasions, he had handed over documents to the CBI, through various seizure memos / letters. He has deposed about these seizure memos / letters as well as documents, Ex PW 52/A to 52/S7 in great detail.
129. PW 53 is Sh. Dharam Bir Sehgal, who was Advisor to BPL Mobile Communication Limited and subsequently to Essar group also. He has deposed about the applications filed by Shipping Stop Dot Com (India) (P) Limited, its financial structure, documents pertaining to Loop Telecom Limited and correspondence with DoT by the companies. He has proved documents, Ex PW 53/A to F21.
130. PW 54 is Sh. M. Ganapathi, who was High Commissioner of India in Mauritius. He has deposed that in response to a letter rogatory issued by this court, some CBI Vs. Ravi Kant Ruia and others Page 74 of 526 documents were received in the office of High Commission from Attorney General of Mauritius. He further deposed that he forwarded these documents to the CBI through a letter. He has proved the letter and documents, Ex PW 54/A to D10.
131. PW 55 is Sh. P. R. Karnik, who was DGM, Essar group. He deposed that he had signed 21 applications for UAS licences, submitted to the DoT by Shipping Stop Dot Com (India) (P) Limited. He has deposed about these applications and the certificates submitted therewith and has proved documents, Ex PW 55/A to D.
132. PW 56 is Lt. Colonel Ajay Madan, who was President, Business Development with Essar group. He was also on the board of some companies including BPL Mobile Communications Limited. He has deposed about minutes of various board meetings of the company and has proved minutes / documents, Ex PW 56/A to E.
133. PW 57 is Sh. Jayan Dsouza, DGM (Finance), Esssar group. He had prepared financial projections to be filed with applications for UAS licences for 21 service areas by Shipping Stop Dot Com (India) (P) Limited. He has proved these projections, Ex PW 57/A1 to A21. He has also deposed about the loan taken by Loop Mobile (India) Limited and Loop Telecom Limited.
134. PW 58 is Sh. Girish K. Sathe, General Manager, Essar group. He was also on the board of many companies of Essar group. He was also authorized signatory for operating bank accounts of various companies of the group. He has deposed CBI Vs. Ravi Kant Ruia and others Page 75 of 526 about some minutes of the board meetings of Essar Investments Limited and Karthik Financial Services Limited. He has also deposed that on numerous occasions, he had sent / handed over documents to the CBI and has proved memos / letters / documents / minutes, Ex PW 58/A1 to J.
135. PW 59 is Sh. Priyadarshi Sidharath, Company Secretary, Loop Telecom (P) Limited. He had signed the certificates and papers submitted with the 21 applications for UAS licences. He has proved the papers, Ex PW 59/X1 to X36 as well as his statement recorded under Section 164 CrPC and documents related thereto, Ex PW 59/A to D.
136. PW 60 is Sh. T. V. Ramachandran, who was Chief Executive Officer, Sterling Cellular Limited. He had signed licence deed, Ex PW 5/E regarding property number 21, Firoz Gandhi Road, Lajpat NagarIII, New Delhi with Essar Investments Limited.
137. PW 61 is Sh. S. Subramaniam, Chief Finance Officer, BPL Cellular Limited. He has deposed about minutes of Shipping Stop Dot Com (India) (P) Limited, filing of applications for UAS licences by it, minutes of Loop Telecom (P) Limited and statement under Section 164 CrPC. He has proved documents, Ex PW 61/A to E.
138. PW 62 is Sh. Sanjeev Chachondia, who joined Essar group in 2006 and later on joined BPL Mobile Communication Limited as its CEO in 2008. He was also on the board of BPL Mobile Communication Limited and Loop Telecom (P) Limited. He has deposed about the minutes of various board meetings of CBI Vs. Ravi Kant Ruia and others Page 76 of 526 these two companies and has proved minutes / documents, Ex PW 62/A to C.
139. PW 63 is Sh. Anupam Kishor Gupta, Manager (Finance), Essar group. He has deposed about correspondence between him and Rajeev Bhatnagar, an officer of SBI, copy of which was also marked to Tarun Bhargava of Loop Telecom Limited. He had also helped in filing of UASL applications by Shipping Stop Dot Com (India) (P) Limited. He has proved documents, Ex PW 63/A to B.
140. PW 64 is Sh. Vinayak Vilas Joshi, Company Secretary, India Securities Limited, an Essar group company. He has deposed about directors of Essar Global Limited, various resolutions passed by it and the documents handed over by him to the CBI. He has proved documents, Ex PW 64/A to E2.
141. PW 65 is Sh. Balbir Singh, Junior Wireless Officer, DoT, New Delhi. He deposed that through two letters dated 05.09.2011 and 20.09.2011, he had handed over documents to the CBI and has proved these letters and documents, Ex PW 65/A to D.
142. PW 66 is Sh. Sukhbir Singh, Director (ASIII), DoT, New Delhi. He has deposed about the processing of 21 UASL applications filed by Shipping Stop Dot Com (India) (P) Limited and issuance of LOIs to it and has proved documents, Ex PW 66/A to A19.
143. PW 67 is Sh. B. L. Panwar, ADG (VAS), DoT, New Delhi. He has deposed about CMTS licence to BPL Mobile Cellular Limited and compliance by it of substantial equity CBI Vs. Ravi Kant Ruia and others Page 77 of 526 clause and processing thereof by the DoT and has proved documents, Ex PW 67/A to E.
144. PW 68 is Sh. P. Suresh, General Manager, ICICI Bank, Mumbai. He has deposed about NCD assistance of Rs. 180 crore by the bank to BPL Communications Limited, which was later on enhanced to Rs. 300 crore, nonpayment thereof by the company and purchase of these NCDs by ETHL. He has proved documents, Ex PW 68/A to Q.
145. PW 69 is Sh. Shailash Kumar Singh, Section Officer, DoT, New Delhi. He has deposed about the files relating to NLD and ILD licences by DoT to Shipping Stop Dot Com (India) (P) Limited and has proved the files relating thereto, the documents filed therewith, Ex PW 69/A to 69/F13 and seizure of the files by the CBI.
146. PW 70 is Sh. Ashok Kumar Singh, ADG (ASI), DoT, New Delhi. He has deposed about the complaints regarding violation of substantial equity clause by Loop Telecom Limited and the processing of the complaints in the DoT. He has proved documents, Ex PW 70/A to A25.
147. PW 71 is Sh. Pranay Kumar, Assistant General Manager, SBI, Mumbai. He has deposed about loan to Loop Telecom Limited by the SBI. He has deposed that the bank sanctioned and approved loan of Rs. 800 crore to the company and corporate guarantee for the same was offered by Essar Global Limited, but the loan could not be disbursed. He has proved documents, Ex PW 71/A to 71/E2.
148. PW 72 is Sh. S. P. Acharya, Reporting Officer, CBI Vs. Ravi Kant Ruia and others Page 78 of 526 Document Division, CFSL, New Delhi. He had examined document, Ex PW 40/E, containing Q1 to Q25, received in the CFSL through letter, Ex PW 72/A. On examining the document, he gave his report, Ex PW 72/B, which was sent to CBI through letter, Ex PW 72/C.
149. PW 73 is Ms. S. Meenakshi, Deputy Registrar of Companies, Chennai. She deposed that through seizure memo, Ex PW 73/A, she had handed over certified copies of documents filed with ROC by Karthik Financial Services Limited and Essar Teleholdings Limited. She has proved these documents as Ex PW 73/B to E22.
150. PW 74 is Sh. Madan Chaurasia, Section Officer (AS I), DoT, New Delhi. He has also deposed about processing of complaints against Loop Telecom Limited in the DoT, relating to violation of substantial equity clause. He has proved documents, Ex PW 74/A to B18.
151. PW 75 is Sh. Prem Rajani, partner of Rajani Associates, a law firm in Mumbai. He has deposed about acquisition of BPL Mobile Communication Limited by Essar group and the legal services rendered by him in this regard.
152. PW 76 is Smt. Vijayalakshmy K. Gupta, Member (F), Telecom Commission. She has also deposed about processing of a complaint received against Loop Telecom Limited. She has proved note, Ex PW 76/A.
153. PW 77 is Sh. R. Ashok, who was also Member (F), Telecom Commission. He has also deposed about processing of complaint against Loop Telecom Limited regarding cross CBI Vs. Ravi Kant Ruia and others Page 79 of 526 holding.
154. PW 78 is Sh. P. K. Mittal, DDG (ASI), DoT, New Delhi. He has deposed about processing of application of Idea for grant of UAS licence for Mumbai service area. He has deposed about compliance of clause 8 of UAS Guidelines in that case. He has proved documents / note, Ex PW 78/A to A22.
155. PW 79 is Sh. R. K. Pathak, DDG (IP), DoT, New Delhi. He has deposed about processing of applications of Shipping Stop Dot Com (India) (P) Limited for UAS licences. He has deposed that compliance of substantial equity clause was not proper and he recommended asking for fresh certificate in prescribed format from the company. He has proved documents, Ex PW 79/A to A2.
156. PW 80 is Sh. Manish Sinha, DDG (LF), DoT, New Delhi. He has also deposed about processing of three complaints against Loop Telecom Limited for violation of substantial equity clause. He deposed that Essar group exercised significant financial control over Loop Telecom Limited through a financial structure.
157. PW 81 is Inspector A. K. S. Yadav of CBI. He deposed that some documents relating to Loop Telecom Limited were collected from SBI, Corporate Accounts Branch, Mumbai by officers of CBI. He further deposed that he handed over these documents / files to Inspector Shyam Prakash of CBI through memo, Ex PW 81/A. He has deposed about these documents including, Ex PW 81/B and C.
158. PW 82 is Sh. Ramesh Kumar Meena, Registrar of CBI Vs. Ravi Kant Ruia and others Page 80 of 526 Companies, Rajasthan, Jaipur. He deposed that he had examined the documents regarding violation of substantial equity clause by Loop Telecom Limited and thereafter prepared his report, Ex PW 82/A. He further deposed that he found that the company was in violation of the clause. He has proved documents, Ex PW 82/A1 to D2.
159. PW 83 is Dr. Santokh Singh, Legal Advisor to DoT. He has also deposed about the processing of complaints against Loop Telecom Limited in DoT regarding violation of substantial equity clause and the view expressed by him in this regard. He has proved note, Ex PW 83/A.
160. PW 84 is Sh. Rajeev Bhatnagar, Officer, SBI, who was posted in Corporate Accounts Group branch, Mumbai in 2007 as Chief Manager. He has deposed about loan facility extended to Loop Telecom Limited by the bank as deposed to by PW 13. He further deposed that he had handed over documents relating to the credit facilities to the aforesaid company to the CBI. He further deposed that corporate guarantee was given by Essar Power Limited and Essar Steel Limited. He has proved documents, Ex PW 84/A to B10.
161. PW 85 is Inspector Shyam Prakash of CBI. He had assisted the investigating officer, Sh. Vivek Priyadarshi, in the investigation of the case. He has deposed about the documents collected / seized and the witnesses examined by him during investigation.
162. PW 86 is Sh. R. S. Meena, Deputy Registrar of Companies, Maharashtra. He deposed that he had handed over CBI Vs. Ravi Kant Ruia and others Page 81 of 526 certified copies of documents filed with ROC by Essar Investments Limited, Santa Trading (P) Limited, Loop Mobile (India) Limited and Loop Mobile Holdings (India) Limited to CBI.
163. PW 87 is Dy. S.P. Rajesh Chahal of CBI. He had also assisted the investigating officer, Sh. Vivek Priyadarshi, in the investigation of the case. He has deposed about the documents collected / seized and the witnesses examined by him during investigation.
164. PW 88 is Sh. Avdhesh Kumar Srivastava, DDG (AS), DoT, New Delhi. He has deposed about processing of applications of Shipping Stop Dot Com (India) (P) Limited for UAS licences in DoT in great detail. He has also deposed about the processing of complaints received in DoT against the company for violation of substantial equity clause by it. He has proved documents / notes, Ex PW 88/A to E2.
165. PW 89 is Sh. Sudesh Kumar, ACMM, New Delhi. He had recorded the statements of Sh. Ajay Madan, Sh. S. Subramaniam and Sh. Priyadarshi Sidharth under Section 164 CrPC and has deposed about the same.
166. PW 90 is Sh. Jitesh Khosla, Chief Secretary, Assam, who was posted as Joint Secretary, in Ministry of Corporate Affairs, New Delhi. He has deposed that letter, Ex PW 90/A, was received in MCA from DoT and the issues mentioned therein were examined in the Ministry.
167. PW 91 is Dy. S.P. S. K. Sinha of CBI. He had also assisted the investigating officer, Sh. Vivek Priyadarshi, in the CBI Vs. Ravi Kant Ruia and others Page 82 of 526 investigation of the case. He has deposed about the documents collected / seized and the witnesses examined by him during investigation.
168. PW 92 is Sh. Arvind Bansal, MM, Delhi. He had recorded the statement of Sh. P. R. Karnik under Section 164 CrPC and has deposed about the same.
169. PW 93 is Dy. S.P. V. M. Mittal of CBI. He had also assisted the investigating officer, Sh. Vivek Priyadarshi, in the investigation of the case. He has deposed about the documents collected / seized and the witnesses examined by him during investigation.
170. PW 94 is Sh. Vivek Priyadarshi, Superintendent of Police, CBI. He is the Investigating Officer of the case. He has deposed about the documents collected by him as well as other officers during investigation. He has also deposed about the witnesses examined during investigation. He further deposed that on completion of investigation, he prepared the charge sheet and filed the same in the Court.
171. PW 95 is Sh. Ratan Raj Packiarajan, Executive, Essar Teleholdings Limited. He deposed that he was also on the board of BPL Communications Limited. He has deposed about the minutes of various board meetings of the company including minutes, Ex PW 95/A1 to A12.
172. Thereafter, prosecution evidence was closed.
173. On closure of prosecution evidence, statement of each accused was recorded under Section 313 CrPC, in which each one of them denied the allegations against him/ her as CBI Vs. Ravi Kant Ruia and others Page 83 of 526 false. Every accused claimed that he / she has been falsely implicated in this case. All eight accused expressed their desire to lead evidence in their defence. However, only five of them examined witnesses in their defence.
174. DW 1 is Sh. Neeraj Gupta, who worked as Executive Director, with Essar Steel. He has been examined for accused Vikash Saraf. He has deposed about a telecom tower renting agreement, Ex PW 42/C, entered into between Essar Telecom Infrastructure (P) Limited (ETIPL) and Loop Telecom (P) Limited and payment of Rs. 700 crore in this regard by ETIPL to Loop Telecom (P) Limited and return thereof. He has also deposed about resignation of Vikash Saraf from the board of ETHL Global Capital. He has also deposed about investment of Rs. 175 crore by ETHL Global Limited into Loop Telecom Limited and return of that amount.
175. DW 2 is Sh. Pawan Arora, Head (Legal & Compliance), Loop Mobile (India) Limited. He has been examined for I. P. Khaitan. He deposed that he is responsible for all compliance related work of Loop Mobile (India) Limited (LMIL) and other group companies, like Loop Mobile Holdings (India) Limited (LMHIL), Loop Telecom Limited etc. He further deposed that daytoday affairs of the company are managed by Sh. Sandeep Basu and he reports to Sh. I. P. Khaitan and Sh. Nalin Khaitan, owners of the company. He also deposed that as per statutory register of Santa Trading (P) Limited, Ex DW 2(A3)/X, Mr. and Mrs. Khaitan are shareholders of the company. He also proved annual reports of Loop Telecom CBI Vs. Ravi Kant Ruia and others Page 84 of 526 Limited for the years 200910, 201011 and 201112, Ex DW 2(A3)/Y1 to Y3.
176. DW 3 is Sh. S. Srinivasa, former Sr. Vice President (Corporate Strategy) of BPL Mobile Communication Limited. He has been examined for Vikash Saraf. He has deposed in detail about the shareholding structure of BPL Communications Limited and its two subsidiaries, BPL Mobile Communication Limited and BPL Cellular Limited. He has also deposed about the sale of shares of Sh. Rajeev Chandrasekhar and his companies to Santa Trading (P) Limited, a company owned by I. P. Khaitan.
177. DW 4 is Sh. B. Shivakumar, General Manager, Essar group, Dubai. He has been examined for Ravi Kant Ruia. He has deposed about temporary advance given by Essar Teleholdings Limited to Khaitan group. He has proved four vouchers, Ex DW 4(A1)/X1 to X4, and has also proved nine ledger extracts, Ex DW 4(A1)/X5 to X13, of different companies in the books of Essar Teleholdings Limited, accompanied by a certificate, Ex DW 4 (A1)/X14 under Section 65B of Evidence Act. He has also deposed as to under what circumstances, resolution dated 06.04.2009, Ex PW 64/A1, was signed by him as alternate director. He has also deposed about transfer of Atul Bhagwat Trading (P) Limited by Mr. Saket Aggarwal and Mr. Rishi Aggarwal to Kiran Khaitan and transfer by Karthik Financial Services Limited (KFSL), a company of Essar group, of its subsidiary Shipping Stop Dot Com (India) Private Limited to I. P. Khaitan.
CBI Vs. Ravi Kant Ruia and others Page 85 of 526178. DW 5 is Sh. M. R. Bhat, Registrar of Companies, Bangalore. He has been examined for I. P. Khaitan. He has deposed that in 2011, he was working as Joint Director in the office of Regional Director, Western Region, Mumbai and was looking after complaints received against corporates. He has deposed that complaints, Ex PW 74/B2 and Ex PW 70/A4, against Essar group alleging that it was using Loop Telecom Limited as a front to acquire one more telecom licence in addition to the one it was already having, received from Sh. Ramesh Rathore, the then Hon'ble MP and from Telecom Watchdog, were dealt with by him and were found to be factually incorrect. He has proved documents, Ex DW 5(A3)/X to Z.
179. DW 6 is Sh. Vipul Modi, a practicing Chartered Accountant from Mumbai. He has been examined for Essar Teleholdings Limited (ETHL). He has deposed that in 2006, ETHL had sought his opinion regarding tax implications of a proposed transaction involving sale of shares of BPL Mobile Communication Limited held by it and he accordingly gave his opinion, Ex DW 6(A8)/X, suggesting minimizing of tax, if it (ETHL) transferred or contributed the shares held by it as capital to an existing partnership firm, and thereafter sale of shares by the firm instead of by the company directly. He further deposed that he considered the transaction solely from tax angle.
180. DW 7 is Sh. Ketan Shah, Vice President, Essar Steel, Mumbai. He has been examined for Vikash Saraf. He has CBI Vs. Ravi Kant Ruia and others Page 86 of 526 deposed that in 200810, he was working as General Manager, Essar Steel and was looking after finance and accounts. He has also deposed about the debiting of account of Loop Mobile Holdings (India) Limited in the books of Essar Steel, for the commission which was due to it on account of guarantee extended by it and entry relating to receipt thereof, a copy of which is, Ex DW 7(A5)/X1 collectively. He has also proved a certified copy of statement of account of Essar Steel in State Bank of India, CAG Branch, Mumbai for the period 01.12.2009 to 05.12.2009, Ex DW 7(A5)/X2, and the payment of the commission is reflected in this statement at points A & B.
181. DW 8 is Sh. Rajendra Kumar Sethi, CFO, Essar Power, Mumbai. He has also been examined for Vikash Saraf. He has deposed about guarantee commission charged by Essar Power Limited as it had given a corporate guarantee to State Bank of India on behalf of Loop Telecom Limited and that BPL Communications Limited, now Loop Mobile Holdings (India) Limited, had given a counter guarantee to Essar Power Limited and agreed to pay commission. He has proved the ledger extracts and bank statements in this regard, Ex DW 8(A5)/X and DW 8(A5)/Y1 to Y7 respectively.
182. DW 9 is Sh. Ashok Tyagi, formerly General Manager (Legal and Company Secretary), Essar group and now a practicing Company Secretary. He has been examined for Loop Telecom Limited. He has deposed that in 199697, he was working with Essar group as General Manager (Legal and Company Secretary) and in that capacity, he was a subscriber to CBI Vs. Ravi Kant Ruia and others Page 87 of 526 the Memorandum of Association of a company by the name of Onchannel Software (P) Limited and was also on its board as one of the first directors, when the company was incorporated in February 1997 and that he left the company in mid 1997 itself. He also deposed that during his tenure company was not engaged in any activity. He also deposed that during one of his visits to Ministry of Corporate Affairs, he met Sh. R. K. Meena, an officer there and during conversation with him, came to know that its name has been changed to Shipping Stop Dot Com (India) Private Limited. He also deposed that its Memorandum and Articles, Ex DW 9 (A6)/X, were drafted by him. He also deposed that as long as he was on the board of company, it was an Essar company.
183. DW 10 is Sh. R. Vasudevan, Director (Inspection & Investigation), Ministry of Corporate Affairs, New Delhi, since retired. He has also been examined for Loop Telecom Limited. He has deposed in detail as to how a complaint, against Loop Telecom Limited, relating to grant of UAS licences to it by DoT, was dealt with during his tenure in MCA. He deposed that according to shareholding pattern of Loop Telecom Limited, STPL is controlling it and it (LTL) is not being controlled by any promoter of Essar group or BPL Communications.
184. DW 11 is Sh. P. K. Bahri, Director (Finance), Khaitan Group, Dubai. He has been examined for I. P. Khaitan. He deposed that he knows I. P. Khaitan since 1990. He deposed that five overseas investors held 20% share in BPL Communications Limited. He further deposed that he helped I. CBI Vs. Ravi Kant Ruia and others Page 88 of 526 P. Khaitan in negotiating the price of shares of these five overseas investors and after negotiation their shares were bought by I. P. Khaitan.
185. DW 12 is Sh. Rahul Taneja, Sr. Vice President (Corporate Human Resources), Essar Group, Mumbai. He has been examined for Vikash Saraf. He has deposed that till March 2007, Vikash Saraf was consultant with Essar Teleholdings Limited (ETHL) and thereafter he joined Essar Investments Limited (EIL) as President (Strategy & Mergers and Acquisition). He also deposed that till March 2007, he (Vikas Saraf) was responsible for telecom business group. He also deposed that to his knowledge, Loop Telecom Limited belongs to I. P. Khaitan. He further deposed that it is a tradition of Essar group to extend help to family members of founders of Essar group and on account of this tradition, Ajay Madan was holding the post of CEO of Loop Telecom Limited.
186. Thereafter, defence evidence was closed. Sh. D. R. Meena, former Law Secretary, Government of India, was also examined as CW 1.
187. The accused were also questioned under Section 313 CrPC about the statement of CW 1 (Court Witness) Sh. D. R. Meena, Law Secretary (Retired), Government of India, in which the accused denied the correctness of his deposition.
188. I have extensively heard the arguments at the bar for months together and have carefully gone through the record.
189. In brief, the case of the prosecution, as submitted at CBI Vs. Ravi Kant Ruia and others Page 89 of 526 the bar, is that Loop Mobile (India) Limited was operating a UAS licence in Mumbai service area since 2005. It is also the case of the prosecution that Loop Telecom Limited applied for 21 UAS licences on 03.09.2007. It is also the case of the prosecution that Essar Group already had a stake of 33% in Vodafone Essar Limited, a Pan India licensee. It is the case of the prosecution that in terms of Clause 8 of UASL Guidelines dated 14.12.2005, a company which had a stake of 10% or more in an existing licensee, cannot apply for a new licence for access services in the same service area. It is the case of the prosecution that since Essar Group was already having 33% stake in Vodafone Essar Limited, it could not have applied for a new licence. It is the case of the prosecution that in order to circumvent Clause 8, Essar Group used Loop Telecom Limited to apply for UAS licences in 21 service areas. It is the case of the prosecution that Loop Telecom Limited was a front company of Essar Group. It is the case of the prosecution that it was so done that DoT considered that Loop Telecom Limited was not substantially controlled by Essar Group or was an "Associate" of the group. It is the case of the prosecution that in this way DoT was cheated into issuing 21 licences to Loop Telecom Limited and this was done by concealing the actual stakeholders of Loop Telecom Limited behind corporate veil. Sh. Anand Grover, learned Spl. PP invited my attention to the facts of the case and evidence led on record in great detail for months together.
190. On the other hand, the case of defence, as submitted at the bar, in brief, is that Loop Telecom Limited was a company CBI Vs. Ravi Kant Ruia and others Page 90 of 526 of Sh. I. P. Khaitan and Ms. Kiran Khaitan and it applied for 21 UAS licences in its own right. It is the case of the defence that the company did not violate clause 8 of the Guidelines dated 14.12.2005 or any other Guidelines. It is the case of the defence that there is absolutely no evidence on record in support of the prosecution case. Learned counsel for the defence also invited my attention to the facts of the case and evidence led on record in great detail for months together.
Apart from the facts and evidence, learned counsel for the parties liberally invited my attention to numerous case law.
191. Sh. Anand Grover, learned Sr. Advocate/ Spl. PP for CBI, invited my attention to the following case law:
1) R. V. E. Venkatachala Gounder Vs. Arulmigu Viswesaraswami & V. P. Temple and Another, (2003) 8 SCC 752;
2) Kali Ram Vs. State of Himachal Pradesh, (1973) 2 SCC 808;
3) Tahsildar Singh & Another Vs. State of U.P., AIR 1959 SC 1012;
4) Baleshwar Rai Alias Nepali Master etc. Vs. State of Bihar, (1964) 1 CriLJ 564;
5) Iridium India Telecom Limited Vs. Motorola Incorporated and Others, (2011) 1 SCC 74;
6) R. Venkatkrishnan Vs. Central Bureau of Investigation, (2009) 11 SCC 737;
7) Mohd. Khalid Vs. State of W.B., (2002) 7 SCC 334;
8) Juggilal Kamlapat Vs. Commissioner of Income Tax, U.P., AIR 1969 SC 932;
9) Kalwa Devadattam and Others Vs. The Union of India and Others, AIR 1964 SC 880;
10) Subhra Mukherjee and Another Vs. Bharat Coking Coal Ltd. and Others, (2000) 3 SCC 312;CBI Vs. Ravi Kant Ruia and others Page 91 of 526
11) Calcutta Chromotype Ltd. Vs. Collector of Central Excise, Calcutta, (1998) 3 SCC 681;
12) Delhi Development Authority Vs. Skipper Construction Co. (P) Ltd. and Another, (1996) 4 SCC 622;
13) Sunil Siddharthbhai Vs. Commissioner of Income Tax, Ahmedabad, Gujarat, (1985) 4 SCC 519;
14) Juggilal Kamlapat Vs. General Fibre Dealers Ltd., AIR 1962 SC 1123;
15) Tata Engineering and Locomotive Co. Ltd. Vs. State of Bihar, AIR 1965 SC 40; and
16) J. K. Industries Limited and Another Vs. Union of India and Others, (2007) 13 SCC 673.
192. On the other hand, Sh. Harish Salve, learned Sr. Advocate for ETHL, invited my attention to the following case law:
1) Devender Kumar Singla Vs. Baldev Krishan Singla, (2005) 9 SCC 15;
2) Suryalakshmi Cotton Mills Limited Vs. Rajvir Industries Limited and Others, (2008) 13 SCC 678;
3) Alpic Finance Ltd. Vs. P. Sadasivan and Another, (2001) 3 SCC 513;
4) Thermax Limited and Others Vs. K. M. Johny and Others, (2011) 13 SCC 412;
5) Ram Narayan Popli Vs. Central Bureau of Investigation; (2003) 3 SCC 641;
6) Vodafone International Holdings BV Vs. Union of India and Another, (2012) 6 SCC 613;
7) Som Prakash Rekhi Vs. Union of India and Another, (1981) 1 SCC 449;
8) Macbeth & Co. Vs. Chislett, H. L. (E.), 1910;
9) Kotak Mahindra Bank Limited Vs. Hindustan National Glass & Industries Limited and Others, (2013) 7 SCC 369; and
10) Naresh K. Aggarwal and Company Vs. Canbank Financial Services Limited and Another, (2010) 6 SCC CBI Vs. Ravi Kant Ruia and others Page 92 of 526
178.
193. Dr. Abhishek Manu Singhvi, learned Sr. Advocate for Ravi Kant Ruia and Anshuman Ruia, invited my attention to the following case law:
1) Sardul Singh Caveeshar Vs. State of Bombay, 1958 SCR 161;
2) State Vs. Navjot Sandhu, 2005 (11) SCC 600;
3) Kehar Singh and others Vs. State (Delhi Administration), 1988 (3) SCFC 609;
4) State of Kerala Vs. P. Sugathan, 2000 (8) SCC 203;
5) Esher Singh Vs. State of A.P., 2004 (11) SCC 585;
6) K. R. Purushottam Vs. State of Kerala, 2005 (12) SCC 631;
7) State (Govt. of NCT of Delhi) Vs. Nitin Gunwant Shah, 2016 (1) SCC 472;
8) Nizam Vs. State of Rajasthan, 2016 (1) SCC 550;
9) Bodhraj Vs. State of J&K, 2002 (8) SCC 45;
10) C. Chenga Reddy Vs. State of A. P., 1996 (10) SCC 193;
11) Trimukh Maroti Kirkan Vs. State of Maharashtra, 2006 (10) SCC 681;
12) Sharad Birdhichand Sarda Vs. State of Maharashtra, 1984 (4) SCC 116;
13) Padala Veera Reddy Vs. State of A.P., 1989 Supp (2) SCC 706;
14) State of Karnataka Vs. Pratap Chand, 1981 (2) SCC 335;
15) Jethsur Surangbhai Vs. State of Gujarat, 1984 (Supp) SCC 207;
16) Sham Sunder Vs. State of Haryana, 1989 (4) SCC 630;
17) Hira Hari Lal Bhagwati Vs. CBI, 2003 (5) SCC 257;
18) S.M.S. Pharmaceuticals Limited Vs. Neeta Bhalla and another, 2005 (8) SCC 89;
19) S. K. Alagh Vs. State of U.P., 2008 (5) SCC 662;
20) Maksud Saiyed Vs. State of Gujarat, 2008 (5) SCC 668;
21) R. Kalyani Vs. Janak C. Mehta, 2009 (1) SCC 516;
22) K. K. Ahuja Vs. V. K. Vora and another, 2009 (10) SCC 48;CBI Vs. Ravi Kant Ruia and others Page 93 of 526
23) keki Hormusji Vs. Mehervan Rustom Irani, 2009 (6) SCC 475;
24) M. A. A. Annamalai Vs. State of Karnataka, 2010 (8) SCC 524;
25) Maharashtra State Electricity Vs. Datar Switchgear, 2010 (10) SCC 479;
26) Thermax Vs. KM Johny, 2011 (13) SCC 412;
27) GHCL Vs. India Infoline, 2013 (4) SCC 506;
28) Sunil Bharti Mittal Vs. CBI, 2015 (4) SCC 609
29) John Pandian Vs. State represented by Inspector of Police, Tamil Nadu, (2010) 14 SCC 129;
30) Life Insurance Corporation of India and Another Vs. Ram Pal Singh Bisen, (2010) 4 SCC 491;
31) Kaliya Vs. State of Madhya Pradesh, (2013) 10 SCC 758;
32) U. Sree Vs. U. Srinivas, (2013) 2 SCC 114;
33) S. P. Bhatnagar Vs. State of Maharashtra, (1979) 1 SCC 535;
34) Khatri Hemraj Amulakh Vs. The State of Gujarat, (1972) 3 SCC 671;
35) Om Prakash Berlia and Another Vs. Unit Trust of India and Others, AIR 1983 Bom 1;
36) Murugan alias Settu Vs. State of Tamil Nadu, (2011) 6 SCC 111;
37) Satpal Singh Vs. State of Haryana, (2010) 8 SCC 714;
and
38) Sudir Engineering Company Vs. Nitco Roadways Ltd., 1995 (34) DRJ.
194. Sh. S. V. Raju, learned Sr. Advocate for Vikash Saraf, invited my attention to the following case law:
1) Rattiram and others Vs. State of Madhya Pradesh (through Inspector of Police), (2012) 4 SCC 516;
2) Govindaraju @ Govinda Vs. State by Sriramapuram police station and another, (2012) 4 SCC 722;
3) Padam Singh Vs. State of U. P., (2000) 1 SCC 621;
4) Kamlesh Prabhudas Tanna and another Vs. State of Gujarat, (2013) 15 SCC 263;CBI Vs. Ravi Kant Ruia and others Page 94 of 526
5) Krishna Janardhan Bhat Vs. Dattatraya G. Hegde, (2008) 4 SCC 54;
6) Narendra Singh and another Vs. State of M. P., (2004) 10 SCC 699;
7) Mousam Singh Roy and others Vs. State of W. B., (2003) 12 SCC 377;
8) Hanumant, son of Govind Nargundkar Vs. State of Madhya Pradesh, AIR 1952 SC 343;
9) Sharad Birdhichand Sarda Vs. State of Maharashtra, (1984) 4 SCC 116;
10) Narender Kumar Vs. State (NCT of Delhi), (2012) 7 SCC 171;
11) Raj Kumar Singh @ Raju @ Batya Vs. State of Rajasthan, (2013) 5 SCC 722;
12) Rishipal Vs. State of Uttarakhand, (2013) 12 SCC 551;
13) Sarwan Singh s/o Rattan Singh Vs. State of Punjab, AIR 1957 SC 637;
14) Dasari Siva Prasad Reddy Vs. Public Prosecutor, High Court of A.P., (2004) 11 SCC 282;
15) Umakant and another Vs. State of Chhattisgarh, (2014) 7 SCC 405;
16) Kali Ram Vs. State of Himachal Pradesh, (1973) 2 SCC 808 and Vinod Chaturvedi and Others Vs. State of Madhya Pradesh, (1984) 2 SCC 350;
17) Dhan Raj @ Dhand Vs. State of Haryana, (2014) 6 SCC 745;
18) Laxmi Narain Kalra Vs. State of Uttar Pradesh, AIR 1956 SC 544;
19) B. Suresh Yadav Vs. Sharifa Bee and another, (2007) 13 SCC 107;
20) Anil Kumar Bose Vs. State of Bihar, (1974) 4 SCC 616 ;
21) Mohammed Ibrahim and Others Vs. State of Bihar and Another, (2009) 8 SCC 751;
22) Robert John D'souza and Others Vs. Stephen V. Gomes and Another, (2015) 9 SCC 96;
23) Hari Sao and Another Vs. The State of Bihar, 1969(3) SCC 107;
24) V. P. Shrivastava Vs. Indian Explosives Limited and Others, (2010) 10 SCC 361;CBI Vs. Ravi Kant Ruia and others Page 95 of 526
25) Hridaya Ranjan Prasad Verma and Others Vs. State of Bihar and Another, (2000) 4 SCC 168;
26) Joseph Salvaraj A. Vs. State of Gujarat and Others, (2011) 7 SCC 59;
27) Vir Prakash Sharma Vs. Anil Kumar Agarwal and Another, (2007) 7 SCC 373;
28) Dalip Kaur and Others Vs. Jagnar Singh and Another, (2009) 14 SCC 696;
29) Uma Shankar Gopalika Vs. State of Bihar and Another, (2005) 10 SCC 336;
30) Suryalakshmi Cotton Mills Limited Vs. Rajvir Industries Limited and others, (2008) 13 SCC 678;
31) Vesa Holdings Private Limited and Another Vs. State of Kerala and Others, (2015) 8 SCC 293;
32) State of Kerala Vs. A. Pareed Pillai and Another, (1972) 3 SCC 661;
33) Harmanpreet Singh Ahluwalia and Others Vs. State of Punjab and Others, (2009) 7 SCC 712;
34) Hira Lal Hari Lal Bhagwati Vs. CBI, New Delhi, (2003) 5 SCC 257;
35) Thermax Limited and Others Vs. K. M. Johny and Others, (2011) 13 SCC 412;
36) R. Kalyani Vs. Janak C. Mehta and Others, (2009) 1 SCC 516;
37) Sunil Bharti Mittal Vs. Central Bureau of Investigation, (2015) 4 SCC 609;
38) S. V. L. Murthy Vs. State represented by CBI, Hyderabad, (2009) 6 SCC 77;
39) Ajay Mitra Vs. State of M. P. and Others, (2003) 3 SCC 11;
40) State of Bihar Vs. Bhagirath Sharma and Another, (1973) 2 SCC 257;
41) State of Maharashtra Vs. Hansraj Depar Parle Oil Centre and Others, (1977) 2 SCC 216;
42) Abdul Fazal Siddiqui Vs. Fatehchand Hirawat and Another, (1996) 6 SCC 32;
43) Soma Chakravarty Vs. State through CBI, (2007) 5 SCC 403;
44) S. K. Zutshi and Another Vs. Bimal Debnath and Another, (2004) 8 SCC 31;CBI Vs. Ravi Kant Ruia and others Page 96 of 526
45) Chandan Kumar Basu Vs. State of Bihar, (2014) 13 SCC 70;
46) Raj Kishor Roy Vs. Kamleshwar Pandey and Another, (2002) 6 SCC 543;
47) Suresh Kumar Bhikamchand Jain Vs. Pandey Ajay Bhushan and Others, (1998) 1 SCC 205;
48) Devender Pal Singh Vs. State of NCT of Delhi and Another, (2002) 5 SCC 234;
49) Esher Singh Vs. State of A. P., (2004) 11 SCC 585 ;
50) Baldev Singh Vs. State of Punjab, (2009) 6 SCC 564 ;
51) K. R. Purushothaman Vs. State of Kerala, (2005) 12 SCC 631;
52) Baliya alias Bal Kishan Vs. State of Madhya Pradesh, (2012) 9 SCC 696;
53) State of Madhya Pradesh Vs. Sheetla Sahai and Others, 2009 (8) SCC 617;
54) State (NCT of Delhi) Vs. Navjot Sandhu alias Afsan Guru, (2005) 11 SCC 600;
55) Saju Vs. State of Kerala, (2001) 1 SCC 378;
56) State of Karnataka Vs. L. Muniswamy and Others, (1977) 2 SCC 699;
57) Babubhai Bhimabhai Bokhiria and Another Vs State of Gujarat and Others, (2014) 5 SCC 568;
58) P. K. Narayanan Vs. State of Kerala, (1995) 1 SCC 142;
59) Bhagwan Swarup Lal Bishan Lal Vs. State of Maharashtra, AIR 1965 SC 682;
60) State through Superintendent of Police, CBI/SIT Vs. Nalini and Others, (1999) 5 SCC 253;
61) State of Gujarat Vs. Mohammed Atik and Others, (1998) 4 SCC 351;
62) Central Bureau of Investigation Vs. V. C. Shukla & Others, (1998) 3 SCC 410;
63) State of U. P. through Central Bureau of Investigation Vs. Dr. Sanjay Singh and Another, 1994 Supp (2) SCC 707;
64) Hanumant, son of Govind Nargundkar Vs. State of Madhya Pradesh, AIR 1952 SC 343;
65) State of Gujarat Vs. Kishanbhai and Others, (2014) 5 SCC 108;
66) Mahabir Mandal and Others Vs. State of Bihar, (1972) CBI Vs. Ravi Kant Ruia and others Page 97 of 526 1 SCC 748;
67) Sidcul Industrial Association Vs. State of Uttarakhand and Others, MANU/UC/1466/2010;
68) Centre for Public Interest Litigation and Others Vs. Union of India and Others, (2011) 1 SCC 560;
69) Raymond Synthetics Ltd. and Others Vs. Union of India and Others, (1992) 2 SCC 255;
70) Pawan Kumar Vs. State of Haryana, (2003) 11 SCC 241;
71) Jagdish Narain and Another Vs. State of U. P., (1996) 8 SCC 199;
72) Abdulali Yusufali Vs. Abdulhusan Taiyabali Dhalria and Others, MANU/GJ/0168/1978;
73) Regina Vs. Turner (Terence);
74) Malay Kumar Ganguly Vs. Dr. Sukumar Mukherjee
and Others, (2009) 9 SCC 221;
75) Ashoka Marketing Ltd. and Another Vs. Punjab
National Bank and Others, (1990) 4 SCC 406;
76) Illachi Devi (Dead) by LRs. and Others Vs. Jain Society, Protection of Orphans India and Others, (2003) 8 SCC 413;
77) M/s Aluminium Corporation of India Ltd. Vs. Workmen, (1964) 4 SCR 429;
78) Raja Ram Vs. State of Rajasthan, (2005) 5 SCC 272;
79) Javed Masood and Another Vs. State of Rajasthan, (2010) 3 SCC 538;
80) Mukhtiar Ahmed Ansari Vs. State (NCT of Delhi), (2005) 5 SCC 258; and
81) Raghu Lakshminarayanan Vs. Fine Tubes, (2007) 5 SCC 103.
195. Sh. Dayan Krishnan, learned Sr. Advocate for I. P. Khaitan, Ms. Kiran Khaitan and M/s Loop Telecom Limited, invited my attention to the following case law:
1. Chanan Singh son of Kartar Singh Vs. State of Haryana, (1971) 3 SCC 466;
2. Rammi alias Rameshwar Vs. State of M. P., (1999) 8 SCC 649;CBI Vs. Ravi Kant Ruia and others Page 98 of 526
3. Vinod Kumar Vs. State of Punjab, (2015) 3 SCC 220;
4. Ramsewak and Others Vs. State of M. P., (2004) 11 SCC 259;
5. Chander Pal Vs. State of Haryana, (2002) 2 SCC 755;
6. V. Y. Jose and Another Vs. State of Gujarat and Another, (2009) 3 SCC 78;
7. International Advanced Research Centre for Powder Metallurgy and New Materials (ARCI) and Others Vs. Nimra Cerglass Technics Private Limited and Another, (2016) 1 SCC 348;
8. Smt. M. Printer and Others Vs. Marcel Martins, ILR 2002 KAR 3757;
9. Marcel Martins Vs. M. Printer and Others, (2012) 5 SCC 342;
10. Pawan Kumar Gupta Vs. Rochiram Nagdeo, (1999) 4 SCC 243;
11. Tomaso Bruno and Another Vs. State of Uttar Pradesh, (2015) 7 SCC 178;
12. Kali Ram Vs. State of Himachal Pradesh, (1973) 2 SCC 808;
13. Vinod Chaturvedi and Others Vs. State of Madhya Pradesh, (1984) 2 SCC 350;
14. Paulmeli and Another Vs. State of Tamil Nadu through Inspector of Police, (2014) 13 SCC 90;
15. Rameshbhai Mohanbhai Koli and Others Vs. State of Gujarat, (2011) 11 SCC 111;
16. State of Madhya Pradesh Vs. Baldeo, (1961) 1 SCR 970;
17. Kartar Singh Vs. Union of India, (1994) 3 SCC 569;
18. K. A. Abbas Vs. Union of India, (1970) 2 SCC 780;
19. Shreya Singhal Vs. UOI, (2015) 5 SCC 1;
20. Bengal Immunity Company Limited Vs. State of Bihar and Ors, AIR 1955 SC 661;
21. Braithwaite & Co. (India) Ltd. Vs. Employees' State Insurance Corporation, AIR 1968 SC 413;
22. Commissioner of Income Tax, West Bengal Vs. Shyam Narain Mehrotra, 1978 SCC Online Cal 377;
23. J. K. Industries Limited and another Vs. Union of India and others, (2007) 13 SCC 673
24. G. Narayanaswami Vs. G. Pannerselvam and Others, CBI Vs. Ravi Kant Ruia and others Page 99 of 526 (1972) 3 SCC 717;
25. Salim Ahmed Hamdan Vs. Donald H. Rumsfeld, 548 U. S. 557;
26. Vodafone International Holdings BV Vs. Union of India and Another, (2012) 6 SCC 613;
27. Steel Brothers & Co. Ltd. Vs. Commissioner of Income Tax, AIR 1958 SC 315;
28. Ganga Metal Refining Co. Pr. Ltd. Vs. Commissioner of Income Tax, West Bengal, AIR 1967 Cal 429; and
29. Vodafone International Holdings BV Vs. Union of India and Another, 2010 Vol. 112 (6) Bom. L. R. 3792.
196. In rebuttal, Sh. Anand Grover, learned Sr. Advocate/ Spl. PP for CBI, invited my attention to the following case law:
1) Delhi Science Forum and Others Vs. Union of India and Another, (1996) 2 SCC 405;
2) Ramana Dayaram Shetty Vs. International Airport Authority of India and Others, (1979) 3 SCC 489;
3) State of Madhya Pradesh and Another Vs. Firm Gobardhan Dass Kailash Nath, (1973) 1 SCC 668;
4) Poddar Steel Corporation Vs. Ganesh Engineering Works and Others, (1991) 3 SCC 273;
5) Electrical Manufacturing Company Limited Vs. Power Grid Corporation of India Limited and Another, (2009) 4 SCC 87;
6) Vishnu (Dead) by LRs Vs. State of Maharashtra and Others, (2014) 1 SCC 516;
7) Gurudevdatta Vksss Maryadit and Others Vs. State of Maharashtra and Others, (2001) 4 SCC 534;
8) Forest Range Officer and Others Vs. P. Mohammed Ali and Others, 1993 Supp (3) SCC 627;
9) Siemens Public Communication Networks Private Limited and Another Vs. Union of India and Others, (2008) 16 SCC 215;
10) BLA Power Pvt. Ltd. Vs. Union of India and Others, W. P. No. 846/2015 (High Court of Madhya Pradesh, Jabalpur);
11) Bharti Airtel Limited Vs. Union of India, (2015) 12 SCC 1;CBI Vs. Ravi Kant Ruia and others Page 100 of 526
12) Delhi Development Authority Vs. Skipper Construction Co. (P) Ltd. and Another, (1996) 4 SCC 622;
13) Commissioner of Central Excise, New Delhi Vs. Modi Alkalies & Chemicals Ltd. and Others, (2004) 7 SCC 569;
14) Gilford Motor Company Limited Vs. Horne, [1932. G. 1418],
15) Hindusthan Motors Ltd. Vs. Monopolies and Restrictive Trade Practices Commission and Others, AIR 1973 Cal 450;
16) Balwant Rai Saluja and Another Vs. Air India Limited and Others, (2014) 9 SCC 407;
17) Faiza Ben Hashem Vs. Abdulhadi Ali Shayif, [2008] EWHC 2390 (Fam);
18) Kailash Nath Agarwal and Others Vs. Pradeshiya Industrial & Investment Corporation of U. P. Ltd. and Another, (2003) 4 SCC 305;
19) J. K. Industries Limited and Another Vs. Union of India and Others, (2007) 13 SCC 673;
20) R Vs. K, [2006] B. C. C. 362;
21) Manohar Lal Sharma Vs. Union of India and Another, (2013) 6 SCC 616;
22) International Commerce Ltd. Vs. Secretary, Ministry of Coal, W. P. (C) No. 9815 of 2014 (High Court of Orissa, Cuttack);
23) Sethi Auto Service Station and Another Vs. Delhi Development Authority and Others, (2009) 1 SCC 180;
24) State of Maharashtra Vs. Hansraj Depar Parle Oil Centre and Others, (1977) 2 SCC 216;
25) State of Bihar Vs. Bhagirath Sharma and Another, (1973) 2 SCC 257;
26) Shivanarayan Kabra Vs. State of Madras, AIR 1967 SC 986;
27) Devender Kumar Singla Vs. Baldev Krishan Singla, (2005) 9 SCC 15;
28) Dalip Kaur and Others Vs. Jagnar Singh and Another, (2009) 14 SCC 696;
29) Regina Vs. William Butcher, (1858) 6 E.R. 169;
30) Haji Samo Vs. Emperor, AIR 1927 Sind 161;
31) State of U. P. Vs. Joti Prasad, AIR 1962 All 582;CBI Vs. Ravi Kant Ruia and others Page 101 of 526
32) R. Vs. Neil Bancroft Stringer, [1992] 94 Cr. App. R. 13;
33) Ishwarlal Girdharilal Parekh Vs. State of Maharashtra and Others, (1969) 1 SCR 193;
34) In re J. S. Dhas and Another, 1939 SCC OnLine Mad 407;
35) E. K. Krishnan Vs. Emperor, (1947) MWN Cr. 162;
36) Centre for Public Interest Litigation and Others Vs. Union of India and Others, (2012) 3 SCC 1;
37) Reg. Vs. Hanmanta, 7 Bom. H. C. Rep. 26, A, C. J.;
38) Kanumukkala Krishnamurthy Vs. State of Andhra Pradesh, AIR 1965 SC 333;
39) A. R. Antulay Vs. Ramdas Sriniwas Nayak and Another, (1984) 2 SCC 500;
40) Shriram Krishnappa asegaonkar Vs. State of Maharashtra and Another, 1986 SCC OnLine Bom 191;
41) Iridium India Telecom Limited Vs. Motorola Incorporated and Others, (2011) 1 SCC 74;
42) The Directors, & c., of The Central Railway Company of Venezuela Vs. Joseph Kisch, 1867 L. R. 2 HR;
43) The New Brunswick and Canada Railway and Land Company Vs. Muggeridge, (1860) 62 E. R. 418;
44) Dobell Vs. Stevens, (1825) 107 E. R. 864;
45) Bakhshish Singh Dhaliwal Vs. State of Punjab, AIR 1967 SC 752;
46) Mohd. Khalid Vs. State of W.B., (2002) 7 SCC 334;
47) Krishna Dayal Vs. Emperor, AIR 1946 All 227;
48) The Collector, Raigarh Vs. Chaturbhuj Panda and Others, AIR 1964 MP 196;
49) Balkishen Das and Others Vs. Legge, 27 IA 58;
50) Markandelal Diryodhansao Agarwal Bani Vs. Sitambharnath Ramhirdayal Sao Agarwal Bani, MANU/NA/0070/1942;
51) Pandit Chunchun Jha Vs. Sheikh Ebadat Ali and Another, AIR 1954 SC 345;
52) Baleshwar Rai Alias Nepali Master etc. Vs. State of Bihar, (1963) 2 SCR 433;
53) Kali Ram Vs. State of Himachal Pradesh, (1973) 2 SCC 808;
54) Vinod Chaturvedi and Others Vs. State of Madhya Pradesh, (1984) 2 SCC 350;CBI Vs. Ravi Kant Ruia and others Page 102 of 526
th
55) Castleton Investment Limited, C/o DTO Ltd., 10 Floor, Raffles Tower, 19, Cybercity, Ebene, Mauritius Vs. Commissioner Concerned: Director of Incometax (International TaxationI) Mumbai, 2012 SCC OnLine AAR 35;
56) S. E. Investments Ltd. through Director Vs. Union of India (UOI) and Ors., MANU/DE/1442/2011;
57) Firozuddin Basheeruddin and Others Vs. State of Kerala, (2001) 7 SCC 596;
58) R. Venkatkrishnan Vs. Central Bureau of Investigation, (2009) 11 SCC 737;
59) Mir Nagvi Askari Vs. Central Bureau of Investigation, (2009) 15 SCC 643; and
60) Mohammad Usman Mohammad Hussain Maniyar and Others Vs. State of Maharashtra, (1981) 2 SCC 443.
I may note that I have carefully gone through the entire case law cited at the bar by the parties.
197. The instant case is a case of criminal conspiracy to cheat the DoT into issuing 21 UAS licences to Loop Telecom Limited, an ineligible company, as it was a front of Essar group of companies, which were already having more than 10% equity in an existing pan India licensee, that is, Vodafone Essar Limited. In pursuance to the conspiracy, the DoT was in fact allegedly cheated also into issuing these licences.
198. Let me take note of law on conspiracy.
199. In an authority reported as Mohd. Khalid Vs. State of W. B., (2002) 7 SCC 334, while dealing with the question of conspiracy, Hon'ble Supreme Court observed in paragraphs 17 to 27 as under:
"17. It would be appropriate to deal with the question of conspiracy. Section 120B IPC is the provision which provides for punishment for CBI Vs. Ravi Kant Ruia and others Page 103 of 526 criminal conspiracy. Definition of "criminal conspiracy" given in Section 120A reads as follows:
"120A. When two or more persons agree to do, or cause to be done,-
(1) an illegal act, or (2) an act which is not illegal by illegal means, such an agreement is designated a criminal conspiracy:
Provided that no agreement except an agreement to commit an offence shall amount to a criminal conspiracy unless some act besides the agreement is done by one or more parties to such agreement in pursuance thereof."
The elements of a criminal conspiracy have been stated to be: (a) an object to be accomplished, (b) a plan or scheme embodying means to accomplish that object, (c) an agreement or understanding between two or more of the accused persons whereby, they become definitely committed to cooperate for the accomplishment of the object by the means embodied in the agreement, or by any effectual means, and (d) in the jurisdiction where the statute required an overt act. The essence of a criminal conspiracy is the unlawful combination and ordinarily the offence is complete when the combination is framed. From this, it necessarily follows that unless the statute so requires, no overt act need be done in furtherance of the conspiracy, and that the object of the combination need not be accomplished, in order to constitute an indictable offence. Law making conspiracy a crime, is designed to curb immoderate power to do mischief which is gained by a combination of the means. The encouragement and support which coconspirators give to one another rendering enterprises possible which, if left to individual effort, would have been impossible, furnish the ground for visiting conspirators and abettors with condign punishment. The conspiracy is held to be continued and renewed CBI Vs. Ravi Kant Ruia and others Page 104 of 526 as to all its members wherever and whenever any member of the conspiracy acts in furtherance of the common design. (See American Jurisprudence, Vol. II, Sec. 23, p. 559.) For an offence punishable under Section 120B, the prosecution need not necessarily prove that the perpetrators expressly agreed to do or cause to be done an illegal act; the agreement may be proved by necessary implication. The offence of criminal conspiracy has its foundation in an agreement to commit an offence. A conspiracy consists not merely in the intention of two or more, but in the agreement of two or more to do an unlawful act by unlawful means. So long as such a design rests in intention only, it is not indictable. When two agree to carry it into effect, the very plot is an act in itself, and an act of each of the parties, promise against promise, actus contra actum, capable of being enforced, if lawful, punishable if for a criminal object or for use of criminal means.
18. No doubt in the case of conspiracy there cannot be any direct evidence. The ingredients of the offence are that there should be an agreement between persons who are alleged to conspire and the said agreement should be for doing an illegal act or for doing by illegal means an act which itself may not be illegal. Therefore, the essence of criminal conspiracy is an agreement to do an illegal act and such an agreement can be proved either by direct evidence or by circumstantial evidence or by both, and it is a matter of common experience that direct evidence to prove conspiracy is rarely available.
Therefore, the circumstances proved before, during and after the concurrence have to be considered to decide about the complicity of the accused.
19. In Halsbury's Laws of England (vide 4th Edn., Vol. 11, p. 44, para 58), the English law as to conspiracy has been stated thus:
"58. Conspiracy consists in the agreement of CBI Vs. Ravi Kant Ruia and others Page 105 of 526 two or more persons to do an unlawful act, or to do a lawful act by unlawful means. It is an indictable offence at common law, the punishment for which is imprisonment or fine or both in the discretion of the court.
The essence of the offence of conspiracy is the fact of combination by agreement. the agreement may be express or implied, or in part express or in part implied. The conspiracy arises and the offence is committed as soon as the agreement is made; and the offence continues to be committed so long as the combination persists, that is until the conspiratorial agreement is terminated by completion of its performance or by abandonment or frustration or however it may be. The actus reus in a conspiracy is the agreement to execute the illegal conduct, not the execution of it. It is not enough that two or more persons pursued the same unlawful object at the same time or in the same place; it is necessary to show a meeting of minds, a consensus to effect an unlawful purpose. It is not, however, necessary that each conspirator should have been in communication with every other."
20. There is no difference between the mode of proof of the offence of conspiracy and that of any other offence, it can be established by direct or circumstantial evidence. [See Bhagwan Swarup Lal Bishan Lal v. State of Maharashtra (AIR at p. 686).]
21. Privacy and secrecy are more characteristics of a conspiracy, than of a loud discussion in an elevated place open to public view. Direct evidence in proof of a conspiracy is seldom available, offence of conspiracy can be proved by either direct or circumstantial evidence. It is not always possible to CBI Vs. Ravi Kant Ruia and others Page 106 of 526 give affirmative evidence about the date of the formation of the criminal conspiracy, about the persons who took part in the formation of the conspiracy, about the object, which the objectors set before themselves as the object of conspiracy, and about the manner in which the object of conspiracy is to be carried out, all this is necessarily a matter of inference.
22. The provisions of Sections 120A and 120B IPC have brought the law of conspiracy in India in line with the English law by making the overt act unessential when the conspiracy is to commit any punishable offence. The English law on this matter is well settled. Russel on Crime (12th Edn., Vol. I, p.
202) may be usefully noted-
"The gist of the offence of conspiracy then lies, not in doing the act, or effecting the purpose for which the conspiracy is formed, nor in attempting to do them, nor in inciting others to do them, but in the forming of the scheme or agreement between the parties, agreement is essential. Mere knowledge, or even discussion, of the plan is not, per se, enough."
Glanville Williams in Criminal Law (2nd Edn., p.
382) states-
"The question arose in an Iowa case, but it was discussed in terms of conspiracy rather than of accessoryship. D. who had a grievance against P, told E that if he would whip P someone would pay his fine. E replied that he did not want anyone to pay his fine, that he had a grievance of his own against P and that he would whip him at the first opportunity. E whipped P. D was acquitted of conspiracy because there no agreement for 'concert of action', no agreement to 'cooperate'."
Coleridge, J. while summing up the case to the jury CBI Vs. Ravi Kant Ruia and others Page 107 of 526 in R. v. Murphy (ER at p. 508) states:
"...I am bound to tell you, that although the common design is the root of the charge, it is not necessary to prove that these two parties came together and actually agreed in terms to have this common design, and to pursue it by common means, and so to carry it into execution. This is not necessary, because in many cases of the most clearly established conspiracies there are no means of proving any such thing, and neither law nor common sense requires that it should be proved. If you find that these two persons pursued by their acts the same object, often by the same means, one performing one part of an act, and the other another part of the same act, so as to complete it, with a view to the attainment of conclusion that they have been engaged in a conspiracy to effect that object. The question you have to ask yourselves is, 'had they this common design, and did they pursue it by these common means
- the design being unlawful?'"
23. As noted above, the essential ingredient of the offence of criminal conspiracy is the agreement to commit an offence. In a case where the agreement is for accomplishment of an act which by itself constitutes an offence, then in that event no overt act is necessary to be proved by the prosecution because in such a situation, criminal conspiracy is established by proving such an agreement. Where the conspiracy alleged is with regard to commission of a serious crime of the nature as contemplated in Section 120B read with the proviso to subsection (2) of Section 120A, then in that event mere proof of an agreement between the accused for commission of such a crime alone is enough to bring about a conviction under Section 120B and the proof of any overt act by the accused or by any one of them would not be necessary. The provisions, in CBI Vs. Ravi Kant Ruia and others Page 108 of 526 such a situation, do not require that each and every person who is a party to the conspiracy must do some overt act towards the fulfillment of the object of conspiracy, the essential ingredient being an agreement between the conspirators to commit the crime and if these requirements and ingredients are established, the act would fall within the trappings of the provisions contained in Section 120B. (See Suresh Chandra Bahri v. State of Bihar).
24. Conspiracies are not hatched in the open, by their nature, they are secretly planned, they can be proved even by circumstantial evidence, the lack of direct evidence relating to conspiracy has no consequence. (See E. K. Chandrasenan v. State of Kerala).
25. In Kehar Singh v. State (Delhi Admn.) (AIR at p. 1954) this Court observed: (SCC pp. 73233, para
275) "275. Generally, a conspiracy is hatched in secrecy and it may be difficult to adduce direct evidence of the same. The prosecution will often rely on evidence of acts of various parties to infer that they were done in reference to their common intention. The prosecution will also more often rely upon circumstantial evidence. The conspiracy can be undoubtedly proved by such evidence direct or circumstantial. But the court must enquire whether the two persons are independently pursuing the same end or they have come together to the pursuit of the unlawful object. The former does not render them conspirators, but the latter does. It is, however, essential that the offence of conspiracy required some kind of physical manifestation of agreement. The express agreement, however, need not be proved. Nor actual meeting of the two persons is necessary. Nor is it necessary to prove the CBI Vs. Ravi Kant Ruia and others Page 109 of 526 actual words of communication. The evidence as to transmission of thoughts sharing the unlawful design may be sufficient."
Conspiracy can be proved by circumstances and other materials. (See State of Bihar v. Paramhans Yadav.) To establish a charge of conspiracy knowledge about indulgence in either an illegal act or a legal act by illegal means is necessary. In some cases, intent of unlawful use being made of the goods or services in question may be inferred from the knowledge itself. This apart, prosecution has not to establish that a particular unlawful use was intended, so long as the goods or service in question could not be put to any lawful use. Finally, when the ultimate offence consists of a chain of actions, it would not be necessary for the prosecution to establish, to bring home the charge of conspiracy, that each of the conspirators had the knowledge of what the collaborator would do, so long as it is known that the collaborator would put the goods or service to an unlawful use. (See State of Maharashtra v. Som Nath Thapa, SCC p. 668, para 24.)
26. We may usefully refer to Ajay Aggarwal v. Union of India. It was held: (SCC pp. 61718, paras 810) "8. ... It is not necessary that each conspirator must know all the details of the scheme nor be a participant at every stage. It is necessary that they should agree for design or object of the conspiracy. Conspiracy is conceived as having three elements: (1) agreement; (2) between two or more persons by whom the agreement is effected; and (3) a criminal object, which may be either the ultimate aim of the agreement, or may constitute the means, or one of the means by which that aim is to be CBI Vs. Ravi Kant Ruia and others Page 110 of 526 accomplished. It is immaterial whether this is found in the ultimate objects. The common law definition of 'criminal conspiracy' was stated first by Lord Denman in Jones case that an indictment for conspiracy must 'charge a conspiracy to do an unlawful act by unlawful means' and was elaborated by Willies, J. on behalf of the Judges while referring the question to the House of Lords in Mulcahy v. R. and House of Lords in unanimous decision reiterated in Quinn v. Leathem :
'A conspiracy consists not merely in the intention of two or more, but in the agreement of two or more, to do an unlawful act, or to do a lawful act by unlawful means. So long as such a design rests in intention only, it is not indictable. When two agree to carry it into effect the very plot is an act in itself, and the act of each of the parties, promise against promise, actus contra actum, capable of being enforced, if lawful; and punishable if for a criminal object, or for the use of criminal means.'
9. This Court in E. G. Barsay v. State of Bombay held:
"The gist of the offence is an agreement to break the law. The parties to such an agreement will be guilty of criminal conspiracy, though the illegal act agreed to be done has not been done. So too, it is an ingredient of the offence that all the parties should agree to do a single illegal act. It may comprise the commissions of a number of acts. Under Section 43 of the Indian Penal Code, an act would illegal if it is an offence or if it is prohibited by law'.
In Yash Pal Mittal v. State of Punjab the rule was laid as follows: (SCC p. 543, para 9) CBI Vs. Ravi Kant Ruia and others Page 111 of 526 '...The very agreement, concert or league is the ingredient of the offence. It is not necessary that all the conspirators must know each and every detail of the conspiracy as long as they are coparticipators in the main object of the conspiracy. There may be so many devices and techniques adopted to achieve the common goal of the conspiracy and there may be division of performances in the chain of actions with one object to achieve the real end of which every collaborator must be aware and in which each one of them must be interested. There must be unity of object or purpose but there may be plurality of means sometimes even unknown to one another, amongst the conspirators. In achieving the goal several offences may be committed by some of the conspirators even unknown to the others. The only relevant factor is that all means adopted and illegal acts done must be and purported to be in furtherance of the object of the conspiracy even though there may be sometimes misfire or overshooting by some of the conspirators.'
10. In Mohd. Usman Mohd. Hussain Maniyar v. State of Maharashtra it was held that for an offence under Section 120B IPC, the prosecution need not necessarily prove that the conspirators expressly agreed to do or cause to be done the illegal act, the agreement may be proved by necessary implications.
27. Where trustworthy evidence establishing all links of circumstantial evidence is available the confession of a coaccused as to conspiracy even without corroborative evidence can be taken into consideration. (See Baburao Bajirao Patil v. State of Maharashtra.) It can in some cases be inferred from the acts and conduct of the parties. (See CBI Vs. Ravi Kant Ruia and others Page 112 of 526 Shivnarayan Laxminarayan Joshi v. State of Maharashtra.)"
200. In the light of facts of the case, evidence led on record by the parties and the submissions made at the bar, I proceed to dispose of the case issuewise.
Background of Insertion of Clause 8:
201. Telecom licences are granted under Section 4 of the Indian Telegraph Act, 1885. Section 4 of the same reads as under:
"4. Exclusive privilege in respect of telegraphs, and power to grant licences [(1) Within [India], the Central Government shall have the exclusive privilege of establishing, maintaining and working telegraphs:
PROVIDED that the Central Government may grant a licence, on such conditions and in consideration of such payments as it thinks fit, to any person to establish, maintain or work a telegraph within any part of [India]:
[PROVIDED FURTHER that the Central Government may, by rules made under this Act and published in the Official Gazette, permit, subject to such restrictions and conditions as it thinks fit, the establishment, maintenance and working
(a) of wireless telegraphs on ships within Indian territorial waters [and on aircraft within or above [India], or Indian territorial waters], and
(b) of telegraphs other than wireless telegraphs within any part of [India].
[Explanation: The payments made for the grant of a licence under this subsection shall include such sum attributable to the Universal Service Obligation as may be determined by the Central Government after considering the recommendations made in this CBI Vs. Ravi Kant Ruia and others Page 113 of 526 behalf by the Telecom Regulatory Authority of India established under subsection (1) of section 3 of the Telecom Regulatory Authority of India Act, 1997.] [(2) The Central Government may, by notification in the Official Gazette, delegate to the telegraph authority all or any of its powers under the first proviso to subsection (1).
The exercise by the telegraph authority of any power so delegated shall be subject to such restrictions and conditions as the Central Government may, by the notification, think fit to impose.]"
202. From the perusal of the Section, it is clear that telecom licences are granted by Central Government under Section 4 of Indian Telegraph Act on such terms and conditions as deemed appropriate by it.
203. Consequent to the liberalization policy of 1991 of Government of India, private sector was invited to participate in the telecom sector. Following this policy, DoT had initially granted two CMTS licences each in four metro cities in 1994 on Beauty Parade basis for providing mobile services, known as First Cellular. In 1995, eighteen CMTS licences were granted in eighteen service areas by bidding process, known as Second Cellular. In 1999, National Telecom Policy was announced and revenue sharing regime was introduced. Duopoly was dispensed with and multipoly regime was introduced. MTNL and BSNL were also introduced as Third Cellular in the year 19992000. In the year 2001, Fourth Cellular was introduced by resorting to bidding process.
204. In 2003, Unified Licencing Regime was introduced CBI Vs. Ravi Kant Ruia and others Page 114 of 526 and Guidelines dated 11.11.2003 were issued. In the year 2005, with the liberalization of Foreign Direct Investment (FDI) Regime, fresh Guidelines dated 14.12.2005 were issued. These Guidelines contain terms and conditions, including payment, on which telecom licence would be issued.
205. With the introduction of multipoly, need was felt to ensure that one single entity does not exercise control over two entities providing mobile services. It was to be ensured that competition was not compromised. To ensure this, Substantial Equity clause was introduced in the licence agreement. However, when fresh Guidelines dated 14.12.2005 were issued, "substantial equity clause" was inserted in the Guidelines itself in Clause 8. This clause reads as under:
"No single company/ legal person, either directly or through its associates, shall have substantial equity holding in more than one LICENSEE Company in the same service area for the Access Services namely; Basic, Cellular and Unified Access Service. 'Substantial equity' herein will mean 'an equity of 10% or more'. A promoter company/ Legal person cannot have stakes in more than one LICENSEE Company for the same service area. A certificate to this effect shall be provided by the applicant's company Secretary alongwith application."
206. PW 88 Sh. A. K. Srivastava in his examinationin chief dated 10.12.2013, pages 1 to 3, deposed about introduction of clause 8 as under:
".......I have been shown DoT file D397, already Ex PW85/L (collectively). This is a genuine DoT file and CBI Vs. Ravi Kant Ruia and others Page 115 of 526 was opened in the official course of business to deal with finalization of NIT and tender document to be floated for induction of fourth / additional cellular operators.
Initially, two operators each for cellular services were granted licences in four metros and thereafter, in other circles of the country under NTP94. Thereafter, NTP99 was announced by the Government of India, whereby the duopoly of operators for cellular services was dispensed with and multipoly was brought in and also, the revenue sharing regime for payment of annual licence fee was introduced in place of fixed licence fee regime. In terms of NTP99, MTNL and BSNL, that is, PSUs of Government of India were given licences to operate cellular services in the country and are popularly known as third cellular operators. The recommendations of TRAI was sought on need and timing for introduction of fourth cellular operator in the country. TRAI had opined in affirmative for induction of the fourth cellular operator and the guidelines for the same were announced by the Government. The present file, that is, Ex PW85/L, deals with finalization of NIT and tender document. The tender document underwent a drastic change under the fourth cellular as the regime of earlier tender was under fixed licence fee and now, it was shifting to a new regime of revenue sharing and Government had also dispensed with the duopoly replacing it with multipoly regime and on account of this multipoly regime, a new clause relating to substantial equity stipulation, to ensure that a single entity should not be able to exercise control over two licences in the same service area, was introduced. The idea behind this was to ensure that competition is not compromised. The decision relating to this issue is reflected in note sheet dated 02.03.2001, recorded by me. The same is now Ex PW88/A (D397). The file went to the competent authority and was duly approved vide note sheet CBI Vs. Ravi Kant Ruia and others Page 116 of 526 dated 04.03.2001, that is, the Chairman (TC) after speaking to the then MOC&IT. The note sheet is now Ex PW88/B. Thereafter, Government issued UASL guidelines dated 14.12.2005, where under clause 8 a similar stipulation relating to substantial equity was introduced with intention to ensure that competition is not compromised......"
207. In this deposition, PW 88 Sh. A. K. Srivastava explained as to how clause 8 was introduced to ensure that competition was not compromised. However, he nowhere deposed as to what were the parameters of Clause 8 for ensuring its compliance. He has only made a reference to Clasue 8 without specifying its ingredients which were required to be met by an applicant for a UAS licence. Nowhere, did he make it clear as to when an applicant would be taken to be compliant to the Clause 8 and when would it be taken to be in violation of it.
A. Shareholding of Essar Group in Vodafone Essar:
Condition Precedent
208. It is the case of the prosecution that Essar group had 33% equity in Vodafone Essar Limited, a company which held a licence in Mumbai service area. It is also the case of the prosecution that Vodafone Essar Limited, through its seven subsidiaries, also held licences in the remaining 21 service areas and in these subsidiaries also Essar group held 33% equity. It is the case of the prosecution that in view of this Essar group could not have held 10% or more equity in any other licensee company across the country. It is the case of the prosecution CBI Vs. Ravi Kant Ruia and others Page 117 of 526 that Essar group by contributing to equity of Loop Telecom Limited, through its exaggerated funding violated clause 8 of UAS Guidelines dated 14.12.2005.
209. On the other hand, defence argued that prosecution failed to prove that seven subsidiaries of Vodafone Essar Limited were holding licences in 21 service areas, where Loop Telecom Limited had also applied. It is the case of the defence that the prosecution only proved that Vodafone Essar Limited was having licence in Mumbai service area only. It is the case of the defence that prosecution further failed to prove the basic fact that Essar group was holding 33% equity or any equity at all in these seven subsidiary companies of Vodafone Essar Limited, which held UAS licences in 21 service areas. It is the case of the defence that there is no legally admissible evidence on record as to which were these seven subsidiary companies and how much was the equity held by Essar group in these companies. It is the case of the defence that this is the basic requirement for the proof of this case. It is the case of the defence that if this condition precedent is not proved by the prosecution, the case can fail on this ground alone.
210. Let me take note of the evidence on record.
211. PW 36 Sh. Pushkaraj V. Joshi, Company Secretary, Vodafone Essar Limited, in his examinationinchief dated 20.12.2012, pages 1 to 3, deposed about Vodafone Essar Limited and its subsidiaries and shares of Essar group therein as under:
"........Vodafone Essar Limited was in telecom CBI Vs. Ravi Kant Ruia and others Page 118 of 526 business. Vodafone Essar Limited had telecom licence only for Mumbai service area. There are 22 service areas all over the country including Mumbai. Vodafone Essar Limited holds licences in the remaining 21 service areas also through its seven subsidiaries.
During the period 01.04.2007 to 31.03.2008, the major shareholders of Vodafone Essar Limited were Vodafone group through eight entities holding about 6667% of shareholding, Essar group holding 33.03.04% shares etc. Essar group held its shareholding in Vodafone Essar Limited through its various companies including Essar Com Limited, Essar Communications Limited, ETHL Communications Holding (P) Limited. During the aforesaid period, Sh. Ravi Ruia, Sh. Prashant Ruia, Sh. Anshuman Ruia and Sh. Vikash Saraf were on the board of Vodafone Essar Limited on behalf of Essar group.
The seven subsidiary companies through which Vodafone Essar Limited was holding telecom licences for 21 service areas were having their own boards of directors. Vodafone Essar Limited had its representative on the board of these seven subsidiary companies also. The details of subsidiary companies are reflected in the annual report of Vodafone Essar Limited. Annual report of a company is prepared financial yearwise. Number of subsidiaries may increase or decrease every year.
The shareholding pattern of Vodafone Essar Limited from 2004 to 2011 is reflected in a certified chart handed over by me to the IO, pages 1 to 8. This has been certified by me under my signature as company secretary on behalf of Vodafone Essar Limited. The same is now Ex PW 36/B (D125)......."
212. From this deposition it is not clear as to which companies were subsidiaries of Vodafone Essar Limited. The witness deposed that the details of subsidiary companies are CBI Vs. Ravi Kant Ruia and others Page 119 of 526 reflected in the annual reports, but he did not prove the annual reports. From his deposition it is not clear as to what was the shareholding of Essar group in the subsidiary companies operating UAS licences in 21 service areas. It is also not clear from this evidence as to how Loop Telecom Limited was an "Associate" of any of the companies of Essar group, like Essar Com. Limited, ETHL etc., referred to in the deposition. This witness only deposed that Essar group was having 33% stake in Vodafone Essar Limited through its various companies. It appears that prosecution has failed to prove even this fundamental fact.
213. In order to prove the stake held by Essar group in Vodafone Essar Limited, my attention has been invited to document Ex PW 36/G3, page 360 (D361), wherein it is mentioned that 33% shares in Vodafone Essar Limited are held by Essar group shareholders. It mentions only Vodafone Essar Limited which was operating UAS licence in Mumbai service area and not the subsidiaries. Furthermore, PW 36 Sh. P. V. Joshi did not prove the contents of the document and just exhibited it. It cannot be said that every fact mentioned in a document is correct. My attention was also invited to some other financial documents, Ex PW 36/C (D126), Ex PW 36/E (D128), in which equity held by Essar group shareholders in Vodafone Essar Limited is mentioned. However, these documents do not record the equity held by Essar group companies in the subsidiaries of Vodafone Essar Limited. Moreover, the contents of financials of a company, including its balance sheet, are CBI Vs. Ravi Kant Ruia and others Page 120 of 526 required to be proved as per law. Mere mention of a fact in the financials of a company does not prove the fact. In this regard, it is instructive to take a look on an authority reported as Khandesh Spinning and Weaving Mills Co. Limited Vs. Rashtriya Girni Kamgar Sangh, AIR 1960 SC 571, wherein dealing with the question of proof of facts mentioned in the balance sheet of a company, Hon'ble Supreme Court observed in paragraph 7 as under:
".........The accounts of a company are prepared by the management. The balance sheet and the profit and loss account are also prepared by company's officers. The labour have no concern in it. When so much depends on this item, the principles of equity and justice demand that an Industrial Court should insist upon a clear proof of the same and also give a real and adequate opportunity to the labour to canvass the correctness of the particulars furnished by the employer."
Furthermore, in para 11 it was observed as under:
"What is the position in the present case? It is not suggested that there is any reserve which has been reasonably earmarked to discharge a contractual or statutory obligation. We are only concerned with general reserves. The learned SolicitorGeneral contends that the balance sheet discloses that the entire reserves have been used as working capital and that the respondent did not canvass this position in the statement filed by it before the Industrial Court. We have already pointed out that the balance sheet, without its being proved by a person competent to do so cannot prove that any reserves have been utilised as working capital.........."
214. This authority fully applies in the instant case. No CBI Vs. Ravi Kant Ruia and others Page 121 of 526 specific question was put to the witness by the prosecution to prove the shareholding of Essar group in the seven subsidiary companies. In such a situation, defence had no opportunity to crossexamine the witness on this point. Thus, the fact mentioned in these documents cannot be relied upon without further proof.
215. Furthermore, PW 40 Sh. Amit Kumar Gupta, Senior Vice President, Essar group, in his examinationinchief dated 23.01.2013, page 2, deposed as under:
"..............In the Essar group, all telecom related activities were loosely referred to as Essar Telecom Business Group ETBG). In 2004, there were some investment companies in the group, names of all I am unable to recall now. Essar Teleholdings Limited and Essar Telecom Investments Limited were Indian investment companies of the group during the period 200407. Further Essar Communications Mauritius Limited, Essar Communications Limited and Essar Com Limited were also investment companies of the group. Essar Teleholdings Limited, Essar Telecom Investment Limited, Essar Communications Limited and Essar Com Limited were shareholders in Vodafone Essar Limited at different times. Vodafone Essar was engaged in telecom business. The aforesaid Essar group companies were holding approximately 33% shares in Vodafone Essar.
I am acquainted with BPL Mobile Communications Limited. Essar Teleholdings Limited was having shares in BPL Mobile Communications Limited............"
216. This witness also confines himself to investment by Essar group in Vodafone Essar Limited only, that is, Mumbai CBI Vs. Ravi Kant Ruia and others Page 122 of 526 licence. There is no material on record that Essar group was also having equity in seven subsidiary companies of Vodafone Essar Limited.
217. PW 61 Sh. S. Subramaniam in his examinationin chief dated 30.07.2013, page 5, deposed as under:
".......I was aware that Essar was having 33% stake in Hutchison Essar, which was holding licences for all 22 service areas across the country......"
Here, Sh. S. Subramaniam deposed that Essar was having 33% stake in Hutchison Essar and the prosecution is relying on this deposition to show that Essar group had 33% stake in Hutchison Essar, later on Vodafone Essar. However, he has not based his oral evidence on any document placed on record. His deposition is a mere oral assertion unsupported by any documentary evidence. Mere ipse dixit of a witness would not serve any purpose. It appears to be only a stray observation. It was the duty of the prosecution to disclose full facts on this vital issue on the basis of legally acceptable evidence, which could have been subjected to crossexamination. A reference in the passing would not be enough to prove a fact in a criminal case. In an authority reported as Bhaskar Laxman Jadhav and Others Vs. Karamveer Kakasaheb Wagh Education Society and Others, AIR 2013 SC 523, Hon'ble Supreme Court in a slightly different context, observed in paragraph 49 as under:
"A mere reference to the order dated 2nd May, 2003, en passant, in the order dated 24th July, 2006 does not serve the requirement of disclosure. It is not for the Court to look into every word of the pleadings, CBI Vs. Ravi Kant Ruia and others Page 123 of 526 documents and annexures to fish out a fact. It is for the litigant to come upfront and clean with all material facts and then, on the basis of the submission made by learned counsel, leave it to the Court to determine whether or not a particular fact is relevant for arriving at a decision. Unfortunately, the petitioners have not done this and must suffer the consequence thereof."
218. However, this witness also confines himself to Hutchison Essar, which later on became Vodafone Essar Limited. He did not depose as to which subsidiary of Vodafone Essar Limited was holding licence in which service area and what was the percentage of equity of Essar group in that company.
219. In order to prove that Essar group held at least more than 10% equity in the seven subsidiaries of Vodafone Essar Limited, my attention has also been invited by the prosecution to DoT file D142, Ex PW 67/A, relating to transfer of 100% issued share capital held by BPL Communications Limited in BPL Mobile Cellular Limited to Hutchison Essar Limited. In this file, there are photocopies of seven letters dated 07.12.2007 written by Sh. Sandeep Kathuria, authorized signatory of Vodafone Essar Gujarat Limited, Vodafone Essar Cellular Limited, Vodafone Essar Digilink Limited, Vodafone Essar East Limited, Vodafone Essar Mobile Services Limited, Vodafone Essar South Limited and Vodafone Essar Spacetel Limited to DoT intimating it about the FDI held by these companies in the parent company Vodafone Essar Limited. A photocopy of a similar letter written by Sh. Sandeep Kathuria on behalf of Vodafone Essar Limited to DoT is also available on the file. It is CBI Vs. Ravi Kant Ruia and others Page 124 of 526 the case of the prosecution that these seven letters contain annexure indicating investment by Essar group companies in each of the above seven companies and that investment is more than 10%. It is the case of the prosecution that these seven letters prove the name of the seven subsidiaries holding licences in 21 service areas and also prove that Essar group companies held 10% or more equity in the abovesaid seven subsidiaries.
220. My attention was also invited to DoT file D148, Ex PW 70/A. In this file, my attention has been invited to a letter dated 05.08.2008, Ex PW 74/A4, written by Sh. A. K. Srivastava, DDG (ASI) to MCA seeking its opinion on the complaint of Janhit Morcha. Sh. A. K. Srivastava annexed ten enclosures/ documents to this letter. My attention has specifically been invited to enclosure 9 wherein names of seven Vodafone Essar group companies are mentioned. It is the case of the prosecution that this enclosure 9 proves the seven subsidiaries of Vodafone Essar Limited which held UAS licences across the country except Mumbai.
221. However, the defence argued that the seven letters in file D142 are mere photocopies of the letters and were even not proved or exhibited during evidence. It is the case of the defence that Sh. Sandeep Kathuria has not been examined as a witness. It is also the case of the defence that PW 67 B. L. Panwar, ADG (VAS), who proved this file and other documents contained in the file also did not prove these letters. It is the case of the defence that these letters were not put to him by the prosecution itself. It is the case of the defence that thus these CBI Vs. Ravi Kant Ruia and others Page 125 of 526 letters were also not put to the accused in their statements under Section 313 CrPC and there is no version of the accused about these letters. It is the case of the defence that these letters cannot be read into evidence. The defence has also argued that letter, Ex PW 74/A4, was written by Sh. A. K. Srivastava, who has been examined as PW 88. It is the case of the defence that prosecution did not get this letter and its enclosure proved by Sh. A. K. Srivastava. It is the case of the defence that when prosecution itself could not get the letter proved by Sh. A. K. Srivastava, no reliance can be placed on the letter and enclosure. It is the case of the defence that Sh. A. K. Srivastava could not be crossexamined on this enclosure and hence the accused have no opportunity to assess the correctness of the enclosure.
222. It is a fact that author of the seven letters available in file D142 has not been examined as a witness by the prosecution. It is also a fact that no other witness has also proved these letters or contents thereof. It is also a fact that Sh. A. K. Srivastava, DDG (AS) has been examined as PW 88. It is also a fact that the letter, Ex PW 74/A4 (D148) was not proved by him. This letter has been proved by PW 74 Sh. Madan Chaurasia, the then SO (ASI), DoT. He also did not speak anything about contents of the letter or its enclosure. He just put an exhibit on the letter. In such a situation, the submission of the defence is legally correct that all these letters do not constitute legal evidence. It is instructive to quote an authority reported as Smt. Ram Jawai and Others Vs. Smt. CBI Vs. Ravi Kant Ruia and others Page 126 of 526 Shakuntala Devi and Others, AIR 1993 Delhi 330, wherein one of the parties exhibited letters written by a certain person. However he, that is, writer of the letter was not examined as a witness. Dealing with the question, whether these letters constitute legally admissible evidence or not, Hon'ble Delhi High Court observed in paragraph 19 as under:
"The objectors have taken different stands at different times to show that they are in occupation of the suit premises. In reply to the application filed by the auction purchaser under O. 21, R. 95, C.P.C., they have not mentioned as to since when they are in occupation of these premises. In para 2 of the reply it has only been mentioned that Sh. Kanhaya Lal Mittal and Sh. Krishan Kumar Mittal have been in lawful occupation of the premises bearing No. 226227, Block 'L', W.E.A. Karol Bagh, New Delhi, having been inducted by a competent person since prior to the auction sale of the said property in favour of the auction purchaser/applicant on 2561973. However, in rejoinder to the reply filed on behalf of the auction purchaser dated 19581 in para 4 it has been mentioned for the first time that the objectors were inducted in the premises in question on 111967 when auction stood already confirmed in favour of Harbans Lal Naseem on 1411966. In the application filed under O. 39, R. 12, C.P.C. copy of which is Ex PW 9/D2 in the earlier suit Krishan Kumar v. H. L. Naseem the date of occupation has been shown as 1962. The evidence led by the objectors showing their occupation is, however, after the year 1970 except a few rent receipts alleged to have been given by Sh. Harbans Lal Naseem Ex OW 9/1 to OW 9/9 and the letters Ex OW 9/22 to OW 9/25 allegedly sent by Sh. Harbans Lal Naseem which are not admissible in evidence as Sh. Harbans Lal Naseem, the alleged executant has CBI Vs. Ravi Kant Ruia and others Page 127 of 526 not been proved these documents. What is not evidence, cannot be read as evidence. No material can be relied upon to establish a fact unless the persons who are competent to speak about them are examined and are subjected to crossexamination by the parties against whom they are sought to be used. When a document is produced in Court, a question that naturally arises is - Is it a genuine document, what are its contents and are those statements contained therein are true or not? These rent receipts and the letters allegedly written by Sh. Harbans Lal Naseem have been challenged by the auction purchaser/applicant. Mr. Harbans Lal Naseem was available and he could have been the best witness to come in the witness box and depose about these documents and an opportunity should have been granted to the auction purchaser to cross examine him on these documents. Exhibiting these documents on the basis of the statement of the Objector Sh. Krishan Kumar Mittal does not mean that the contents of these documents are to be read into evidence. Reliance can be made on the decision of the Supreme Court in the case of M/s. Bareilly Electricity Supply Co. Ltd. v. The Workmen, AIR 1972 SC 330 : (1972 Lab IC 330) in support of this legal proposition that the application of principle of natural justice does not imply that what is not evidence can be acted upon. On the other hand what it means is that no material can be relied upon to establish a contested fact which are not spoken to by persons who are competent to speak about them and are subjected to crossexamination by the party against whom they are sought to be used. If a letter or other document is produced to establish some fact which is relevant to the case, the writer must be produced or his affidavit in respect thereof be filed and opportunity afforded to the opposite party who challenges this fact. This is both in accord with the principles of natural justice as also according to the O. III, C.P.C. and the Evidence Act, both of which CBI Vs. Ravi Kant Ruia and others Page 128 of 526 incorporate these general principles."
223. Accordingly, these letters, though part of the official file of DoT, do not constitute legally admissible evidence and are of no help to the prosecution. The end result is that there is no legally admissible evidence on record that Essar group held 33% equity in seven Vodafone Essar companies, holding UAS licences in 21 service areas. The prosecution has thus failed to prove the condition precedent required to be proved for the establishment of the allegations contained in the charge sheet against the accused.
224. Accordingly, the prosecution case can fail on this ground alone.
B. Meaning and Scope of Clause 8 and its Violation by Loop Telecom Limited
225. It is the case of the prosecution that 21 UAS licences were issued to Loop Telecom Limited, but the company was in violation of clause 8. It is the case of the prosecution that the company was funded by Essar group. It is the case of the prosecution that on the date of application itself Essar group had held unsecured nonconvertible debentures of STPL amounting to Rs. 1592 crore. It is the case of the prosecution that this amount was invested by STPL in BPL Communications Limited in the form of equity of Rs. 1006 crore, preference shares of Rs. 175.8 crore and NCDs of Rs. 410 crore. It is the case of the prosecution that BPL Communications Limited held Loop Telecom Limited for 48.76% and it also held 73.99% in CBI Vs. Ravi Kant Ruia and others Page 129 of 526 BPL Mobile Communication Limited. BPL Mobile Communication Limited, in turn, held 51.2% in Loop Telecom Limited. It is the case of the prosecution that thus STPL indirectly held 76.7% equity of Loop Telecom Limited. It is the case of the prosecution that STPL was used as a conduit by Essar group for investing funds in the equity of Loop Telecom Limited.
226. On the other hand, defence argued that meaning of clause 8 is not clear. The language of the clause is uncertain. It is the case of the defence that in any case clause 8 covers only equity and not debt instruments like nonconvertible debentures. It is the case of the prosecution that even otherwise Essar group had no direct investment in Loop Telecom Limited. It is the case of the defence that the clause uses words like "Associate", "promoters", "stake" etc., which have no definite meaning. It is the case of the defence that in the face of such uncertainty, how can an entity be accused of violating this clause.
227. In rebuttal, it was submitted by the prosecution that once the accused had agreed to comply with the Guidelines, they cannot now turn back and say that Guidelines, including Clause 8, were vague and incapable of compliance. It is the case of the prosecution that the accused must be taken to have understood the Guidelines in proper perspective.
228. Vide applications dated 03.09.2007, Shipping Stop Dot Com (India) (P) Limited, later on Loop Telecom Limited, applied for UAS licences in 21 service areas. These applications CBI Vs. Ravi Kant Ruia and others Page 130 of 526 were processed and on finding the same to be in order, LOIs were issued to the company on 10.01.2008. On compliance of LOIs, licence agreements were signed with the company on 29.02.2008.
229. PW 88 Sh. A. K. Srivastava in his examinationin chief dated 10.12.2013, pages 3 to 6, deposed as to how applications were filed by Loop Telecom Limited and as to how licences were issued to it. The deposition reads as under:
".......I have been shown DoT file, D165, already Ex PW66/A (collectively). This is a genuine DoT file and was opened in the official course of business to deal with UASL applications (twenty one service areas) from M/s Shipping Stop Dot Com (India) (P) Limited, now Loop Telecom Pvt. Ltd. Shipping Stop Dot Com (India) (P) Limited had applied for 21 UAS licences vide their applications dated 03.09.2007 received in DoT on 06.09.2007. These applications are already Ex PW53/C1 (D165), and PW53/C2 to C21 (D167 to 186). One of the applications for UP (West) Service area is placed in the file (D165) and rest 20 applications were put below the file for the purpose of processing. All these applications were processed in the file and as per approval of the then MOC&IT, LOIs were issued to the applicant company on 10.01.2008. Each application was supported by a separate set of annexures and one such set of annexure is available in the file, D165, which are already Ex PW16/A to D, PW53/C, PW57/A1, PW61/DJ and some are now Ex PW88/B1 to B3. The grant of LOIs to this company was approved by the then MOC& IT dated 09.01.2008, already Ex PW66/A18 at point E. The LOIs issued to the company are already Ex PW53/D 1 to D21. The certificate issued by the company secretary of this company was received on many occasions. The first certificate was attached CBI Vs. Ravi Kant Ruia and others Page 131 of 526 with the application itself. However, this certificate was not issued by the company secretary, but was issued by its authorized signature and is already available at page 6 in the application, Ex PW53/C1 and at pages 5 in the remaining applications, already Ex PW53/C2 to C21.
On 10.12.2007, the DoT had issued a letter to the applicant company asking for certain clarification and the letter is already Ex PW53/C23. In response to this letter, the applicant company, inter alia, sent a certificate signed by the company secretary and is already Ex PW53/C26. However, the language of this certificate is not as per the requirement of DoT. Thereafter, the applicant company suo motu sent another certificate relating to clause 8 through its letter dated 10.01.2008, already Ex PW53/C29, a certificate already Ex PW53/C30. This certificate was also found to be slightly different from the requirement of DoT.
However, as per clause 3 of LOI, the company was also to furnish a certificate with regard to substantial equity from the company secretary of the applicant before signing of the licence agreement. As such, a fresh certificate was filed by the applicant company, which is already Ex PW53/E25 (D166). This certificate was furnished by the company before the signing of the licence agreement. This was found to be correct.
On 18.09.2007, the applicant company through its letter, already Ex PW61/DF, submitted a correction in shareholding pattern in UASL applications to inform a typographical error in the FDI percentage calculation. This letter contained as annexures the copies of corrected equity details and auditor's certificate, which are already Ex PW15/D and PW15/E. After issuance of LOIs, the company gave its unconditional and unequivocal compliance to the terms and conditions of LOIs, which are already Ex PW53/E, PW53/E20 and now Ex PW88/C, already CBI Vs. Ravi Kant Ruia and others Page 132 of 526 Ex PW59/X1, PW59/X2, now Ex PW88/C1 (D166) pages 29 to 37, already Ex PW53/E1, now Ex PW88/C2, already Ex PW59/X4. These documents were attached with the compliance filed for MP service area. Similar compliance was also filed for the remaining service areas, which are also available in D166. Thereafter, the file was again processed in the light of compliance filed by the applicant company through note dated 18.02.2008, now Ex PW88/C3 and it was finally approved by the then MOC&IT on 26.02.2008, through his note, now Ex PW88/C4. Thereafter, the company was invited to sign the licence agreement as per their seniority in terms of the approval, that is, service area wise, that is, in each service area, whosoever had filed the compliance first, were invited to sign the licence agreement first and as such, 22 licence agreements were signed on each date and so on. Accordingly, the applicant company was also signed 21 licence agreements, which are already Ex PW53/F1 to F21 (D187 to D207).
Sh. Nitin Jain, Director (ASI) and Sh. R.K. Gupta, ADG (ASI) were authorized to sign the licence agreements by the competent authority, that is, the then MOC&IT, on behalf of DoT, and accordingly, they signed these agreements........"
230. In this deposition, PW 88 Sh. A. K. Srivastava deposed that Clause 8 Certificates filed by the company were not in the language prescribed by it. Accordingly, the company was asked again and again to file certificates as per the language prescribed by the clause and ultimately the company complied with the same on 10.01.2008. The DoT accepted this belated compliance. On finding the company eligible for UAS licences, LOIs were issued to it and on compliance of the LOIs, licence agreements, Ex PW 53/F1 to F21 (D187 to D207), CBI Vs. Ravi Kant Ruia and others Page 133 of 526 were signed. The licence agreements were signed by Sh. R. K. Gupta, ADG (ASI), on behalf of President of India. In this deposition Sh. A. K. Srivastava did not mention the parameters of clause 8 which were required to be met by the company.
231. I may add that prosecution examined as many as thirteen officers of the DoT as witnesses. Apart from PW 88 Sh. A. K. Srivastava, it examined PW 65 Sh. Balbir Singh; Junior Wireless Officer, PW 66 Sh. Sukhbir Singh; Director, PW 67 Sh. B. L. Panwar; Assistant Divisional Engineer, PW 69 Sh. Shailesh Kumar Singh; Section Officer, PW 70 Sh. Ashok Kumar Singh; ADG (ASI), PW 74 Sh. Madan Chaurasia; Section Officer (AS I), PW 76 Smt. Vijyalakshmy K. Gupta; Member (F); an officer of the rank of Exofficio Secretary to Government of India, PW 77 Sh. R. Ashok; Member (F); again an officer of the rank of Ex officio Secretary to Government of India, PW 78 Sh. P. K. Mittal; DDG (ASI); an officer of the rank of Joint Secretary to Government of India, PW 79 Sh. R. K. Pathak; DDG (IP) & PW 80 Sh. Manish Sinha; DDG (LF); both officers of the rank of Joint Secretary to Government of India and PW 83 Dr. Santokh Singh; Legal Adviser; DoT; an officer of the rank of Joint Secretary to Government of India. None of these witnesses except LA (T) deposed anything as to the meaning and scope of Clause 8, particularly the word "Associate". Incidentally, PW 83 Dr. Santokh Singh did not support the prosecution version as to violation of Clause 8. Ordinary prudence requires that decision makers must understand the law and rules that guide their decisionmaking and must apply it correctly. When the decision CBI Vs. Ravi Kant Ruia and others Page 134 of 526 maker himself does not understand a rule, how can he say that other party has violated the rule. In an authority reported as Rohitash Kumar and Others Vs. Om Prakash Sharma and Others, AIR 2013 SC 30, Hon'ble Supreme Court emphasized the importance of administrative interpretation and observed in paragraph 14 as under:
"In view of the above, one may reach the conclusion that administrative interpretation may often provide the guidelines for interpreting a particular Rule or executive instruction, and the same may be accepted unless, or course, it is found to be in violation of the Rule itself."
232. It is all the more surprising as Clause 8 was introduced in licence agreement in 2001 on a note dated 02.03.2001, Ex PW 88/A, page 12/N (D397), recorded by Sh. A. K. Srivastava himself. The relevant part of the note reads as under:
"................................................................................. ...................................................................................
2. To finalize the Tender Document and the NIT, a meeting was taken by the Chairman (TC) today (02.03.2001). Member (P), Member (F), Legal Advisor (T), DDG (VAS), DDG (LF) & DDG (BS) were present. Shri A. K. Duggal, Company Secretary, TCIL was special invitee in the meeting for providing certain clarifications. Following was decided:
(i) Substantial equity holding may be defined as equity of 10% or more. For the purpose of adding clarity with regard to ensuring competition and meaning of substantial equity, Para 1.3 (ii) / Section IV of Commercial Conditions will be modified as below:CBI Vs. Ravi Kant Ruia and others Page 135 of 526
"No single company/legal person, either directly or through its associates, shall have substantial equity holding in more than one licensee company in the same service area for the same service. 'Substantial equity' herein will mean 'an equity of 10% or more'. A promoter company cannot have stakes in more than one licensee company for the same service area."
................................................................................... ................................................................................."
233. Sh. A. K. Srivastava himself appeared as PW 88 but remained silent as to the ingredients of Clause 8. If he himself did not know the ingredients of Clause 8, how could he say that the clause was violated by any company?
234. Similarly, five CBI officers were part of the investigation in the instant case. PW 85 Inspector Shyam Prakash, PW 87 Dy. SP Rajesh Chahal, PW 91 Dy. SP S. K. Sinha, PW 93 Dy. SP V. M. Mittal and PW 94 SP Vivek Priyadarshi, the chief investigating officer. None of these witnesses deposed as to what was the requirement of Clause 8 and how did they arrive at the conclusion that Loop Telecom Limited violated the clause.
Economic Interest/ Significant Financial Control through Exaggerated Debt
235. However, PW 70 Sh. Ashok Kumar Singh, ADG (AS I) in his crossexamination dated 14.08.2013, pages 9 and 10, introduced the concept of economic interest for interpretation of Clause 8 and deposed about the scope as under:
"Ques: In paragraph 22 of your noting you have used the words "substantial equity holding/ CBI Vs. Ravi Kant Ruia and others Page 136 of 526 economic interest", however, clause 8 of UASL Guidelines deals with substantial equity holding and this phrase "economic interest" does not find mention therein?
Ans: I have used the word "economic interest" as the theme of the TRAI dealing with this clause was to ensure competition and I used this term accordingly."
Thus, this witness used criteria of economic interest for determining violation of Clause 8.
236. As already noted, I may add that this clause is also known as 'Substantial Equity Clause'. The name itself suggests that it deals with crossholding of equity alone and nothing else. However, this witness introduced a vague test of economic criteria. In the above question to the witness, paragraph 22 of the note, Ex PW 70/A2, recorded by Sh. Ashok Kumar Singh is referred to. This paragraph reads as under:
"In view of above, it emerges that M/s Essar Teleholdings Limited itself & through its associates viz. Essar Investments Limited, have substantial equity holding/ economic interest in more than one UAS Licensee Companies i.e. M/s Loop Telecom Pvt. Ltd. and Vodafone Essar group of UAS licensee companies in the same service area which is a violation of conditions No. 1.4 (ii) of the Unified Access Service licences & clause 8 of UASL Guidelines dated 14.12.2005 for 21 service areas viz. Andhra Pradesh, Assam, Bihar, Tamil Nadu (including Chennai service area), Delhi, Gujarat, Haryana, Himachal Pradesh, Jammu & Kashmir, Karnataka, Kerala, Kolkata, Madhya Pradesh, Maharashtra, NorthEast, Orissa, Punjab, Rajasthan, Uttar Pradesh (East), Uttar Pradesh (West) and West Bengal service area."CBI Vs. Ravi Kant Ruia and others Page 137 of 526
237. Thus, Sh. Ashok Kumar Singh introduced an extraneous and vague element within the scope of Clause 8 for alleging the company to be in violation of Clause 8.
238. It is also instructive to take a look on note dated 24.09.2009, Ex PW 74/A8, page 38/N (D148), recorded by PW 80 Sh. Manish Sinha, DDG (LF), about the complaints against Loop Telecom Limited. The relevant part of this note reads as under:
"................................................................................. ...................................................................................
5. The matter was referred to Ministry of Corporate Affairs on 5.8.2008 (6/C of the file) and the Ministry has given its comments at 80/C of the file. The MCA has pointed out that while Essar group holds only 9.9% equity in Loop Telecom both directly and indirectly, there is significant financial control exercised through the complex financial structure created by Essar group which leads to Loop Telecom. The main items of consideration for analysis in the MCA comments are:
• Essar group holds unsecured nonconvertible debentures of STPL amounting to Rs.1592 crore. • STPL has invested Rs.1592 crore in BPL Communications in the form of equity (Rs.1006 Cr), preference share (Rs.175.8 Cr.) and NCDs (Rs.410 Cr.) BPL Communications in turn holds 48.76% in Loop Telecom and 73.99% in BPL Mobile Communications. Continuing this linkage of holding, BPL Mobile Communications holds 51.2% in Loop telecom.
• STPL thus holds 76.7% of equity of Loop Telecom indirectly. This makes STPL a conduit through which funds have been ultimately invested into equity of Loop Telecom.
CBI Vs. Ravi Kant Ruia and others Page 138 of 526• It is pointed out by MCA that STPL's share capital is only Rs.1 lakh. This creates a debt/equity ratio of 1,59,200.00 for STPL. This is astronomical compared to that of even a strongly debt leveraged going concern. For example, even a finance company such as Tata Capital has unsecured loans of Rs.3,519.48 crore and secured loans of Rs.2,094.39 against share capital of Rs. 2,087.62 crore (Report of Reliance Money dated 10.2.2009. Data pertains to February 2009). This works out to a debt equity ratio of 1.00 for unsecured loans and 2.69 for both types of debt put together.
• It is clear that Essar group's investment in STPL debt is not a normal NCD subscription and points to significant financial control of Essar group over STPL. MCA has also pointed out as follows:
"Therefore, there are significant links and benefits arising to the STPL from the financial transactions, direct and indirect with the Essar group."
6. It has been corroborated through the findings of the MCA that there is significant financial control of Essar group over STPL that in turn owns 76.7% of equity of Loop Telecom. Thus, Essar group can be stated to have significant control over Loop Telecom.
7. The main objective of putting the clause quoted in para 2 above is to ensure that one entity does not control two UAS licensees in the same service area. It is therefore suggested that the issue of control through exaggerated debt funding by Essar group be made a part of the proposed show cause notice to M/s Loop Telecom Pvt. Ltd."
239. Here, for arriving at a conclusion of violation of CBI Vs. Ravi Kant Ruia and others Page 139 of 526 Clause 8 by STPL, Sh. Manish Sinha introduced the concept of significant financial control through debt which is extraneous to Clause 8. He did not explain the parameters of clause 8 before arriving at a conclusion of its violation. He also relied upon MCA report, which would be considered in due course. PW 80 Sh. Manish Sinha deposed about his above note in his examinationinchief dated 30.09.2013, pages 2 and 3, as under:
"........I recorded my findings in the aforesaid note to the effect that the MCA had pointed out that the Essar group held only 9.9% equity in Loop Telecom, both directly and indirectly. There was, however, significant financial control, exercised through a financial structure. The Essar group held unsecured nonconvertible debentures amounting to Rs. 1592 crore in STPL. STPL had further invested the said amount in BPL Communications in the form of equity, preference shares and NCDs. BPL Communications, in turn, held 48.76% in Loop Telecom and 73.99% in BPL Mobile Communication. Further, BPL Mobile Communication holds 51.2% in Loop Telecom. STPL, thus, held 76.7% of equity of Loop Telecom indirectly. Further, it was also pointed that STPL's share capital is only Rs. One lac. This created a debt equity ratio of 1:1,59,200 for STPL. This was considered, in our opinion, to be an astronomical debt compared to that of a even a strongly debt leveraged going concern. In my final opinion, I recorded that as per clause 8, one entity could not have control over two UAS licences in the same service area. Therefore, it was suggested that issue of control through this exaggerated debt funding by Essar group be made part of the show cause notice, which was to be issued to Loop Telecom (P) Limited. I accordingly recommended issue of show cause notice to the company.CBI Vs. Ravi Kant Ruia and others Page 140 of 526
After recording the aforesaid note, I marked the file to Advisor (F). Thereafter, this file was never put up before me.
Court Ques: Ultimately, the thing found by you was that there was exaggerated debt equity ratio and through this Essar group was controlling STPL? Ans: That is correct. I did not find any other means through which Essar was controlling STPL."
240. It is clear that the witness used the concept of significant financial control through exaggerated debt for considering violation of Clause 8, though the clause itself is silent about debt. However, in response to Court Question, he categorically admitted that except debt, he did not consider any other means of control of STPL by Essar group. In this regard, the following crossexamination of the witness, page 4, is relevant:
"........It is correct that in my note already Ex PW 74/A8, I had mainly relied upon MCA report already Ex PW 70/A22. It is correct that clause 8 mentions only about equity and not about non convertible debentures. It is correct that while recommending issuance of show cause notice, I went by the object of the clause 8 and not by its language........"
241. The witness admitted that the clause deals only with equity and not with debt in the form of nonconvertible debentures. He also admitted that he went by the object of the clause and not by its language.
242. The case of the prosecution is that Essar group had heavily invested in debt instruments of STPL. Its case is that as CBI Vs. Ravi Kant Ruia and others Page 141 of 526 per balance sheet as on 31.03.2007, the company had issued nonconvertible debentures worth Rs. 1592 crore and the same were subscribed to by Essar group and this was an excessive debt.
243. Now the question is: Whether any debt equity ratio has been prescribed anywhere for a telecom company? Whether exaggerated debt equity ratio can be considered to be in violation of Clause 8? Whether source of funds of promoters is prescribed anywhere or can they avail it from anywhere by way of debt also? Whether an existing telecom company is prohibited from making investment in debt instruments issued by another telecom company? Whether the funds are to be arranged on standalone basis, that is equity or debt or hybrid, that is, both debt and equity? These things are not prescribed anywhere. Essar group had invested to the extent of 9.9% equity in BPL Mobile Communication Limited and had also invested in debt instruments of STPL to the tune of Rs. 1592 crore. Thus, it was sort of hybrid investment. This is nowhere prohibited.
244. The language of the clause is also not clear as it is saddled with words like "Associate", "Promoter", "Stake" etc., meaning of which is not known to anyone, including DoT officers. Nor anyone tried to clarify the same. One may feel bad about certain things, but as long as things are permitted by rules, people are free to follow the same until the rules are amended. If the DoT felt that spirit of clause 8 was being violated by means of excessive debt funding by one licensee CBI Vs. Ravi Kant Ruia and others Page 142 of 526 company to another licencee company, it was free to amend its guidelines including clause 8. It was also free to amend the licence agreement, clause 5 of which empowers the government to modify the licence agreement any time. Clause 5 of the agreement reads as under:
"5. Modifications in the Terms and Conditions of Licence 5.1 The LICENSOR reserves the right to modify at any time the terms and conditions of the LICENCE, if in the opinion of the LICENSOR it is necessary or expedient to do so in public interest or in the interest of the security of the State or for the proper conduct of the telegraphs. The decision of the LICENSOR shall be final and binding in this regard."
245. There is no material on record that DoT took any steps to do any of these things. Instead of course correction by taking appropriate administrative action, the DoT started playing victim claiming that it has been cheated by Loop Telecom Limited as it was indebted heavily to a group, which already had more than 10% equity in an existing pan India licensee, that is, Vodafone Essar Limited.
Concept of "Group"
246. It is interesting to take a look on the testimony of PW 14 Sh. Adil Malia, Group President (HR), Essar group. In his examinationinchief dated 01.10.2012, pages 1 and 2, he deposed about the meaning of group, which reads as under:
"I joined Essar Group on 01.10.2006 as Group President (Human Resources). In that capacity, I am responsible for human resources, people CBI Vs. Ravi Kant Ruia and others Page 143 of 526 management, leadership development, performance review etc. Ques: Would you please elaborate the meaning of the word ''group'' which you have used in your introduction as group president?
Ans: Essar comprises of several business verticals like steel, oil, power, telecom, shipping etc., and each of these verticals comprises of several companies depending upon the integration of the various businesses, that is, if the vertical pertains to steel business, the companies would be those that deal with manufacturing or sale of steel and collectively all these verticals are referred to as "group".
Ques: How would you determine if a particular company is a company of Essar Group?
Ans: We come to know of this only by way of working of the organization and its integration. By experience of working in the group, one comes to know as to which company is an Essar group company and this becomes apparent by forward and backward integration of the value chain and also from the information available on the website of the Essar group.
Court Question: What do you mean by "value chain"?
Ans: Value chain is a linkage of processes from manufacturing till the product finally reaches the market. When these duties are performed by several companies, they are said to have form a value chain, that is, one company may be manufacturing the product and other may be selling the product and other companies may be engaged in other operations........."
247. Thus, the prosecution introduced the concept of group in order to rope in accused companies. However, the defence, particularly Sh. Harish Salve, learned Sr. Advocate, CBI Vs. Ravi Kant Ruia and others Page 144 of 526 argued that there is no concept of "group" in clause 8.
248. However, from his deposition, no definite meaning of "group" can be made out. It is very difficult to determine when a company would be called group company of Essar group and when not.
249. In his further examinationinchief, page 5, he deposed about Vodafone Essar as under:
".......Ques: Do you know Vodafone Essar? Please tell this Court as to whether Essar is engaged in mobile telephony?
Ans: Vodafone Essar was not part of Essar group. It was only strategic investment. Again said, I do not know the ownership pattern. Essar group was not managing Vodafone Essar.
I know Shashi Ruia and Ravi Ruia. They are promoter directors of Essar group. I identify Ravi Ruia, who is present in the Court today and is younger to Shashi Ruia. I also know Anshuman Ruia. He is son of Sh. Shashi Ruia. He is present in Court and I identify him......."
250. Thus, he deposed that Vodafone Essar, in which Essar group had invested about 33% equity, was not part of Essar. What does this mean? It means that parameters of clause 8 would have to be determined on standalone basis, in the context of guidelines dated 14.12.2005 only without referring to any extraneous concept like definition of "group" etc. not found in the guidelines.
Associate: Its Meaning
251. PW 64 Sh. Vinayak Vilas Joshi is Company Secretary of Essar Shipping Limited. In order to prove that Loop Telecom CBI Vs. Ravi Kant Ruia and others Page 145 of 526 Limited was an "Associate" of Essar Group, prosecution read his deposition. His examinationinchief dated 02.08.2013, pages 3 and 4, reads as under:
".......My attention has been drawn to the resolution passed by the board of Essar Global Limited on 16.09.2009 in which it has been recorded that Loop is an associate company of Essar Global. This resolution is now Ex PW 64/B1, page 450 (D300). I have also been shown copy of the board resolution of Essar Global dated 29.09.2009 and in this resolution also Loop Telecom (P) Limited has been mentioned as associate company of Essar Global Limited. This resolution is now Ex PW 64/B2, page
465. I have also been shown copy of board resolution of Essal Global Limited passed on 24.11.2009, in which also Loop Telecom (P) Limited has been shown as associate company of Essar Global Limited. The same is now Ex PW 64/B3, page 506.
I have been shown copy board resolution of Essar Global Limited, passed on 06.04.2009, wherein the address of Loop Telecom (P) Limited has been recorded as 127, Manmala Tank Road, Taikalwadi, Mahim, Mumbai, and it has been shown as associate company of Essar Global Limited. The same is now Ex PW 64/A1 (as the document is in folder 64/A), page 275 (D299)......."
Thus, the witness deposed that in some resolutions of Essar Global Limited, Loop Telecom (P) Limited was mentioned as its "Associate".
However, this witness did not know the meaning of the word "Associate". During his crossexamination, page 6, in response to a Court question, he deposed as under:
CBI Vs. Ravi Kant Ruia and others Page 146 of 526"Court Ques: You are a qualified company secretary and working as such. Please explain the meaning of word "Associate"?
Ans: I do not know."
Thus, no reliance can be placed on the testimony of this witness.
252. The then Law Secretary Sh. D. R. Meena was examined as Court Witness 1. He had given a report/ opinion Ex PW 94/DB regarding the meaning of word "Associate". He was crossexamined by the prosecution and relevant part of his crossexamination dated 29.08.2014, page 4, reads as under:
"........Ques: Since the guidelines dated 14.12.2005, in which clause 8 finds mention, were drafted by the DoT itself, did you try to know as to what difficulty DoT itself could have in finding the meaning of word "associate"?
Ans: No. I was only asked to give opinion about the word "associate" which I gave in general terms without keeping the Telegraph Rules or the guidelines of 2005 in mind.
I did not try to know from DoT as to what is the background of clause 8, as it was not in my mind that the clause had some background by itself. I did not seek any material from DoT for my perusal before giving my opinion. I have been shown letter dated 16.08.2011, already Ex PW 88/DA, written by DoT to Ministry of Law and Justice, seeking its opinion about word "associate"........."
His further crossexamination by the prosecution, pages 7 and 8, reads as under:
"........In para 13 of my opinion I have used various terms while differentiating "associate" from "mere association". These terms were taken by me from the CBI Vs. Ravi Kant Ruia and others Page 147 of 526 internet. It is wrong to suggest that I did not appreciate the law correctly while giving my opinion. It is wrong to suggest that I deliberately left out the laws dealing with the definition of word "associate"
in the course of drafting my opinion. It is wrong to suggest that I referred only foreign law in my opinion just to give a twisted meaning to word "associate".
It is correct that in para 5 of my opinion, I had left the matter to the discretion of DoT in arriving at the meaning of word "associate".
It is wrong to suggest that my opinion was prepared by someone else and I just appended my signature to it........."
The crossexamination of the witness by the prosecution shows that DoT was facing difficulty in the interpretation of clause 8. It also shows that there was a background to the incorporation of this clause in Guidelines dated 14.12.2005. When the DoT itself did not understand a phrase used by it in its Guidelines and was finding it difficult to interpret and give a definite meaning to it, how did it lie in its mouth to say that the clause was violated by the accused. The crossexamination by the prosecution also shows that in the end the Law Secretary had left the matter to the discretion of the DoT for arriving at the meaning of clause 8 in the light of its own policy and procedure.
253. In his crossexamination by the defence, page 13, he deposed as under:
".......It is correct that "equity" and "stake" are inter changeable words. The 10% ceiling in clause 8, as such, applies to both equity and stake........"CBI Vs. Ravi Kant Ruia and others Page 148 of 526
In his further crossexamination, page 17, he deposed as under:
".......Preference shares and debentures are not relevant to clause 8......."
The crossexamination by defence shows that the clause covers only equity investment and nothing else. Thus, no witness has been able to throw light on the exact meaning of clause 8. The prosecution also did not make any effort to put any question to the witnesses as to the parameters of clause 8 and as to how the accused violated the same.
254. It may be noted that capital market is composed of those who supply funds (lenders) and those who require funds (borrowers). A company in need of money may issue shares and debentures to enable those who have funds to employ them in either of them according to their convenience and sentiment. Thus, money can be mobilized either by issue of equity shares or debt instruments. The policy makers were expected to know it. While framing the licence agreement, ICICI Bank, SBI Caps, TCIL, LA (T) etc. were also consulted. This is clear from file D397, Ex PW 85/L. The "substantial equity clause" was proposed to be included in the licence agreement vide note dated 02.03.2001, Ex PW 88/A, recorded by Sh. A. K. Srivastava. As per Section 85 of Companies Act 1956, share capital is of two kinds, that is, "preference share capital" and "equity share capital". Similarly, debentures are also issued under various provisions of Companies Act.
255. Telecom is a capital intensive industry. When CBI Vs. Ravi Kant Ruia and others Page 149 of 526 restriction was placed only on crossholding of equity, it cannot be said that crossholding in debt by debentures was also automatically prohibited. It would have led to too much control over associational behaviour of telecom entities. It would have also led to regulatory overload. That is the reason that debt instruments, interconnection by common directorship etc. were not included in the clause. DoT must have known that it may lead to some degree of messiness but it was ready to put up with that. Thus, equity capital is the only fundamental of Clause 8. An investor can allocate his assets in equity or debt. Equity is strategic investment as it takes risks and controls the company. Debtors have no control over the company. If an investor invests in a company with high debt equity ratio, it may be against commercial prudence but is not per se violative of clause 8.
256. Exaggerated debt ratio may have strategic nous, but is not prevented. To include debt instruments in Clause 8 is complete malcharacterization of clause. The only way out is to take administrative action to ensure its compliance as well as to provide commercial flexibility to the telecom entities in the management of their affairs.
Clause 8 and Commercial Flexibility:
257. What is the purpose of allowing less than 10% equity of one licensee company into another licensee company? Why this crossholding? What purpose does it serve? The answer is that it adds to commercial flexibility and leads to CBI Vs. Ravi Kant Ruia and others Page 150 of 526 synergy in operations in the telecom sector. It would make the value of the two companies greater than the sum of the two. How would it lead to synergy? It may be by sharing of some personal, infrastructure, tower etc.
258. TRAI in its Recommendations dated 28.08.2007 dealt with the issue of crossholding of less than 10% equity in paragraphs 3.89 to 3.91. These paragraphs read as under:
"3.89 The Authority in its examination of the state of competition in the relevant market, came to the conclusion that the question of the number of players in the relevant market, permissible limit of market share of merged entity in a postmerger scenario, spectrum availability and its allocation etc. have to be examined in its totality and not seen in isolation. In this context also, the Authority emphasizes the need to have a holistic approach in deciding whether to have an exante approach of a 10% like regime or to have a mix of exante and an expost approach to regulation. The Authority has separately recommended a stricter regime of M&A Regulations by reducing the post merger market share of the merged entity from 67% to 40% and the minimum number of players as four. Therefore, it may be argued that keeping yet another exante standalone stipulation of 10% limit for substantial acquisition would be a barrier for market driven efficient operations of the sector. Hence a balance needs to be maintained between ensuring that the consumer has access to a competitive market and scope for firms to grow to improve their economic efficiency.
3.90 At the same time, the Authority is conscious of the need to ensure that business alliances do not end up in concentration of market power resulting in substantial lessening of competition which has CBI Vs. Ravi Kant Ruia and others Page 151 of 526 welfare implications for the consumer and society at large. Of utmost importance in this respect relates to putting in place a regime where there is a scope for commercial flexibility and at the same time the regulatory mechanism ensures that consolidations which might impede competitive activity are not permitted.
3.91 In this context, the Authority has surveyed various definitions having relevance for defining limits of restrictions on crossholdings (see Chapter 3 of consultation paper No.7/2007). The purpose of restricting crossholdings could be twofold. One, to allay the fears that complete removal of restrictions and crossholding could lead to one major operator influencing the decision of another licensee enterprise in the same service area and another is the concern expressed in some quarters that such crossholdings in a rival licensee company should not be used to sabotage the growth plans of the target licensee company. Keeping in view these concerns, and also the need to provide for commercial flexibility to ensure efficiency in operations in the sector, the Authority suggests an upper limit of 20% for crossholding by an existing licensee in another licensee company in the same service area. However, the Authority would suggest a two stage process of clearance in this matter of cross holding. One, the existing limit of less than 10% would continue on an automatic basis as per the present regime and any acquisition of 10% and above and up to 20% will require the prior approval of the licensor."
259. Thus, substantial equity clause only envisages acquisition by one company of the equity capital of other company by less than 10%. In a sense, it prevents only acquisition of equity shareholding beyond 10% or more and nothing else, like extending loan, sharing of personnel, standing CBI Vs. Ravi Kant Ruia and others Page 152 of 526 guarantee etc. These are facets of commercial flexibility. Even TRAI in its Consultation Paper issued on 12.06.2007 for considering the issues referred to it by DoT vide letter dated 13.04.2007 and dealt with by it in Recommendations dated 28.08.2007, while dealing with the clause observed in para 3.6 as under:
"Present license conditions restrict the number of licensees in which any company/legal person (henceforth 'entity') can have a substantial equity holding in, through direct or indirect means. As per corporate law, equity shareholders are considered as owners of the company. Shareholders can influence the decisions or strategies of the companies they own. Generally, a substantial equity holder has the right to participate in the financial or operating policy decisions of a licensing company but does not necessary control its policies."
260. Thus debt holders are excluded from the clause, whatever may be the debt instrument like debentures, preference shares, commercial paper etc. Thus, there is no certainty about the meaning of Clause 8 and the words used therein like "Associate" nor did the prosecution make any effort to get the same clarified. There is no material to indicate as to when one company would become "Associate" of another. As such, there is uncertainty about the clause. It is instructive to take note of the observations of Hon'ble Supreme Court in State of Maharashtra Vs. Hansraj Depar Parle Oil Centre and Others, (1977) 2 SCC 216, wherein paragraphs 10 and 11 read as under:
"10. The prosecution did not make any attempt to CBI Vs. Ravi Kant Ruia and others Page 153 of 526 establish as to what is the true meaning and connotation of the expression 'vanaspati' and what kind of articles or goods are comprehended within the scope of that expression. The witnesses did not even say in their evidence, perfunctory as it is, that the word had acquired a popular meaning and was understood locally in a certain sense. Neither the Act of 1955 nor the Order of 1966 defines the expression 'vanaspati' and it was beside the point to say that 'vanaspati' is defined in the Bombay Sales Tax Act and the Prevention of Food Adulteration Rules 1965 to include hydrogenated oil. The purpose of the Sales Tax Act is to bring within the tax net as large a number of articles as possible, that of the Prevention of Food Adulteration Act and the Rules thereunder is to ensure that the health of the community is not endangered by adulterated or spurious articles of food while that of the Essential Commodities Act with which we are concerned in the instant case is to ensure the availability of essential goods to the community at a proper price. This last Act was passed in order "to provide, in the interests of the general public, for the control of the production, supply and distribution of and trade and commerce in, certain commodities". Sub Inspector Kurdur is no expert for the purposes of this Act and we cannot, without more, accept the dogmatic assertion made by him in one of these cases that vanaspati and hydrogenated oil "mean the same thing". Hydrogenation is a specialised process and is described in Encyclopaedia Britannica (1951 ed., Vol. 11, p. 978) as "the treatment of a substance with hydrogen so that this combines directly with the substance treated. The term has, however, developed a more technical and restricted sense. It is now generally used to mean the treatment of an "unsaturated" organic compound with hydrogen, so as to convert it by direct addition to a "saturated"
compound. The witness, excusably seems unaware of this scientific sidelight and greater the ignorance, CBI Vs. Ravi Kant Ruia and others Page 154 of 526 greater the dogma. If the witness were right, it is difficult to understand why "Groundnut oil, Safflower oil, Sesame oil and Mustard seed oil" and "Coconut oil" find a separate and distinct place in Schedule I at items 5 and 6. Perhaps what the witness guessed, science may show to be true but that has to be shown, not guessed.
11. In State of Bihar v. Bhagirath Sharma a question arose whether motor car tyres were included within the meaning of the expression 'component parts and accessories of automobiles' used in a similar order issued in 1967 by the Bihar Government under the Essential Commodities Act. It was held by this Court that it was not enough that from a broad point of view the tyres and tubes of motor cars may be considered to be covered by the particular expression. After considering and comparing the various items in the particular schedule it was held by this Court that motor car tyres were not comprehended within the expression. It is apposite for our purpose to call attention to what the Court said in that case, namely, that according to the fundamental principle of criminal jurisprudence which reflects fair play, a dealer must know with reasonable certainty and must have a fair warning as to what his obligation is and what act of commission or omission on his part would constitute a criminal offence. Bearing in mind this principle the State Government ought to have expressed its intention clearly and unambiguously by including hydrogenated oils within items 15 and 16 which refer to 'vanaspati'. If that were done, a type of predicament which arises in this case could easily have been avoided, and with profit to the community. We hope this lacuna in the Schedule will be rectified expeditiously."
In another authority reported as State of Madhya Pradesh and Another Vs. Baldeo Prasad, AIR 1961 SC 293, CBI Vs. Ravi Kant Ruia and others Page 155 of 526 Hon'ble Supreme Court while dealing with the definition of word 'Goonda' observed in paragraph 9 as under:
"Incidentally it would also be relevant to point out that the definition of the word "goonda" affords no assistance in deciding which citizen can be put under that category. It is an inclusive definition and it does not indicate which tests have to be applied in deciding whether a person falls in the first part of the definition. Recourse to the dictionary meaning of the word would hardly be of any assistance in this matter. After all it must be borne in mind that the Act authorises the District Magistrate to deprive a citizen of his fundamental right under Art. 19(1)(d) and (e), and though the object of the Act and its purpose would undoubtedly attract the provisions of Art. 19(5) care must always be taken in passing such Acts that they provide sufficient safeguards against casual, capricious or even malacious exercise of the powers conferred by them. It is wellknown that the relevant provisions of the Act are initially put in motion against a person at a lower level than the District Magistrate, and so it is alway necessary that sufficient safeguards should be provided by the Act to protect the fundamental rights of innocent citizens and to save them from unnecessary harassment. That is why we think the definition of the word "goonda" should have given necessary assistance to the District Magistrate in deciding whether a particular citizen falls under the category of goonda or not; that is another infirmity in the Act. As we have already pointed out S. 4A suffers from the same infirmities as S. 4."
Similarly, in an authority reported as S. Mohan Lal Vs. R. Kondiah, (1979) 2 SCC 616, dealing with the definition of word "business", Hon'ble Supreme Court observed in CBI Vs. Ravi Kant Ruia and others Page 156 of 526 paragraph 3 as under:
"The expression 'business' has not been defined in the Andhra Pradesh Buildings (Lease, Rent and Eviction) Control Act, 1960. It is a common expression which is sometimes used by itself and sometimes in a collocation of words as in "business, trade or profession". It is a word of large and wide import, capable of a variety of meanings. It is needless to refer to the meanings given to that term in the various dictionaries except to say that everyone of them notices a large number of meanings of the word. In a broad sense it is taken to mean 'everything that occupies the time, attention and labour of men for the purpose of livelihood or profit'. In a narrow sense it is confined to commercial activity. It is obvious that the meaning of the word must be gleaned from the context in which it is used. Reference to the provisions of the Constitution or other statutes where the expression is used cannot be of any assistance in determining its meaning in Section 10(3)(a)(iii) of the Andhra Pradesh Buildings (Lease, Rent and Eviction) Control Act, 1960. It is not a sound principle of construction to interpret expressions used in one Act with reference to their use and another Act; more so if the two Acts in which the same word is used are not cognate Acts. Neither the meaning, nor the definition of the term in one statute affords a guide to the construction of the same term in another statute and the sense in which the term has been understood in the several statutes does not necessarily throw any light on the manner in which the term should be understood generally. On the other hand it is a sound, and, indeed, a wellknown principle of construction that meaning of words and expressions used in an Act must take their colour from the context in which they appear. Dr. Chitale very frankly and fairly conceded as much."CBI Vs. Ravi Kant Ruia and others Page 157 of 526
Furthermore, in an authority reported as Avishek Goenka Vs. Union of India and another, AIR 2012 SC 2226, Hon'ble Supreme Court while dealing with the regulatory regime of DoT in consultation with TRAI observed in paragraph 18 as under:
"......It is a settled canon of law that in a regulatory regime, the terms and conditions imposed thereunder should be unambiguous and certain. It is expected that the authorities concerned would enforce the regulatory regime with exactitude......."
In a recent authority reported as State of Gujarat Vs. Jayrajbhai Punjabhai Varu, AIR 2016 SC 3218, while dealing with the question of burden of proof, Hon'ble Supreme Court observed in paragraph 13 as under:
"The burden of proof in criminal law is beyond all reasonable doubt. The prosecution has to prove the guilt of the accused beyond all reasonable doubt and it is also the rule of justice in criminal law that if two views are possible on the evidence adduced in the case, one pointing to the guilt of the accused and other towards his innocence, the view which is favourable to the accused should be adopted."
Thus, there is total uncertainty about the meaning and scope of clause 8. The guidelines do not give any guidance for arriving at its meaning to an applicant. One cannot say as to when one would be in compliance of the clause and when he would be in violation of it.
CBI Vs. Ravi Kant Ruia and others Page 158 of 526Complaint of Telecom Watchdog relating to Violation of Clause 8 by the Company and Opinion of MCA thereon
261. It is the case of the prosecution that Ministry of Corporate Affairs, in its report, had opined that there was violation of clause 8 by Loop Telecom Limited. In order to emphasize its point, the MCA report, Ex PW 70/A22 page 360 (D148), and note dated 22.10.2008, Ex PW 82/A13 (D149), recorded by Sh. R. K. Meena and note dated 31.01.2009, Ex PW 82/D4, recorded by Sh. Jitesh Khosla have been read out at the bar in great detail. It is the case of the prosecution that Essar group was in control of Loop Telecom Limited as it had excessively funded Loop Telecom Limited and by the use of funding, it exercised control over Loop Telecom Limited. It is the case of the prosecution that MCA report categorically established the violation of clause 8 by Essar group.
262. On the other hand, defence argued that Sh. R. K. Meena took extraneous material into consideration for concluding that Essar group was controlling Loop Telecom Limited. It is the case of the defence that even otherwise MCA report was not conclusive and final view was to be taken by DoT itself, which it failed to do. My attention has been invited to the note of Sh. Jitesh Khosla, Ex PW 82/D4, as well as to MCA report, Ex PW 70/A22.
263. It may be noted that after issue of LOIs but before signing of licence agreements with Loop Telecom Limited, a compliant, Ex PW 74/A, was received from Janhit Morcha CBI Vs. Ravi Kant Ruia and others Page 159 of 526 alleging violation of Clause 8 by it. PW 88 Sh. A. K. Srivastava in his examinationinchief dated 10.12.2013, pages 6 to 10, deposed about the receipt of the complaint, DoT treating it only as allegatory in nature and going ahead with the signing of licence agreement, as under:
".......I have been shown DoT file D148, already Ex PW70/A (collectively). This is a genuine file and was opened in official course of business to deal with a complaint received from Janhit Morcha, alleging therein certain violations on the part of Loop Telecom Pvt. Ltd., in respect of their applications for UAS licences. The complaint is already Ex PW74/A. This complaint was processed by Sh. Madan Chaurasia, through his note, already Ex PW70/A1, dated 22.02.2008. This note was put up to me through proper channel and it bears my signature at point B, dated 26.02.2008. I marked the file to DDG (LF) for financial advice. DDG (LF) in his note dated 28.02.2008, already Ex PW70/A18, inter alia, opined that in a service area they have substantial equity in more than one licence, help of legal adviser and Ministry of Company Affairs may be taken in this regard. Thereafter, the file was put up to me. I, through my note dated 28.02.2008, already Ex PW74/A1, recorded that we may not link this complaint to the signing of licences as of now and as per approval of competent authority, the licences may be signed. The complaint, which is allegatory in nature, may be examined subsequently. Court Question: What was the reason for your so opining?
Answer: First, the applicant had unequivocally and unconditionally complied to the terms and conditions of the LOIs and submitted the required bank guarantee and entry fee for obtaining the licences. When the company had complied the LOI terms, the logical action on the part of DoT in response to acceptance of the LOI offer, is to sign the CBI Vs. Ravi Kant Ruia and others Page 160 of 526 licence agreement. Secondly, the competent authority had already approved signing of these licences after taking on record the compliance to LOIs. Thirdly, the company had already furnished an undertaking that, inter alia, if at any time any averment made or information furnished for obtaining the licence, is found incorrect, then their application and the licence, if granted thereto on the basis of such application, shall be cancelled.
Moreover, there was no harm in signing the licences because after examination of the complaint, if their submissions were found incorrect, then the licences could have been terminated and the entry fee forfeited. The DoT was not to suffer any loss in signing the licences. Further more, there was a possibility of litigation from the applicant company, if the licences were not signed after fully complying with the LOI conditions.
Court Question: Isn't it logical for any public authority to first deal with a complaint, rather than proceeding with the official act regarding which complaint is received?
Answer: The complaint was only allegatory in nature and the outcome of investigation and the time frame for such investigation, was uncertain and perhaps very lengthy and this could have delayed the signing of licences for uncertain period. Moreover, at this point of time, the company was an applicant company and the finance advice was that if there is substantial equity problem in more than one licences in a service area, then the matter be examined with the help of legal adviser and Ministry of Company Affairs. Therefore, in view of compliance given by the applicant company, since such compliance were given knowing fully well the consequences, there was no apprehension in the mind of DoT that complaint may turn out to be true and the submissions made by the company are false at that time.
Court Question: In your note sheet, as well as, in CBI Vs. Ravi Kant Ruia and others Page 161 of 526 the aforesaid reply you have used the word 'allegatory' to explain your view point. What do you mean by it?
Answer: In DoT, we used to receive frivolous complaints due to inter corporate rivalry and sometimes these complaints are only meant to harm the interest of the other company, or delay the benefits due to the companies. Therefore, no coercive action was thought proper based on the complaint by not signing the licence agreements. By allegatory, I mean the allegation may be correct or may be incorrect and may arise out of corporate war.
The complaint of Janhit Morcha was received in DoT on 20.02.2008 and was received by Director (AS) on 22.02.2008. After my note, already Ex PW74/A1, the licence agreements were signed between DoT and the applicant company. After signing of agreements, the complaint was further processed in the DoT vide note dated 08.04.2008, already Ex PW74/A2, noted by Sh. Madan Chaurasia, SO (ASI). This note was also put up to me. I recorded through my note dated 01.05.2008, already Ex PW70/A19, that this complaint may be examined by a committee consisting of experts from DoT Finance branch and after recording my note, I forwarded the file to Member (T) and Member (F).
Member (F) recorded in his note dated 19.05.2008, already Ex PW70/A20, that finance branch may not be the appropriate agency to investigate the matter and a committee consisting of members from relevant areas with a representative from Finance or Vigilance Section may examine the matter further. The file was put up to me in its downwards journey. Member (T) called me for discussion. I discussed with Member (T), who desired to propose a letter to MCA. I accordingly, recorded my note dated 28.05.2008, already Ex PW70/A21, and marked the file to Director (ASI)......."
CBI Vs. Ravi Kant Ruia and others Page 162 of 526264. In this deposition, PW 88 Sh. A. K. Srivastava deposed about receipt of the complaint and treating the same only as allegatory in nature, for the reason that it may be frivolous, filed due to intercorporate rivalry. Accordingly, DoT went ahead with the signing of the licence agreements. Thus, DoT itself did not take the complaint very seriously.
The deposition of Sh. A. K. Srivastava alone is good enough to knock out the case of the prosecution. In the charge sheet, paragraph 70 referred to above, the prosecution came with the allegation that the complaints were received by the DoT after the accused persons had cheated the DoT and had fraudulently obtained LOIs, UAS licences and valuable spectrum. However, the deposition of Sh. A. K. Srivastava shows that the complaint was received after the issue of LOIs and the DoT went ahead with the grant of licences and allocation of spectrum taking the complaint to be only allegatory in nature on the ground that either it would turn out to be frivolous due to corporate rivalry of the companies or the company would suffer consequences resulting into forfeiture of its entry fee. Thus, DoT knew the complaint well in advance, but later on started wallowing into victim hood at the instance of CBI.
265. Only, after the signing of the licence agreements, it was decided to seek opinion of Ministry of Corporate Affairs (MCA) on the complaint. PW 88 Sh. A. K. Srivastava in his examinationinchief dated 10.12.2013, pages 10 to 16, deposed about the receipt of opinion of MCA, processing thereof in the CBI Vs. Ravi Kant Ruia and others Page 163 of 526 DoT and the final opinion of the DoT thereon. His deposition reads as under:
".......Thereafter, a note was put up by Sh. Madan Chaurasia, SO (ASI) on 01.07.2008, already Ex PW74/A3, and he proposed a DFA to be sent to MCA for approval. The file was received by me through proper channel on 02.07.2008. I marked the file to Member (T), Member (F) and Secretary (T) for approval of DFA. The file was received back by me with a note of DDG (LF) dated 07.07.2008, now Ex PW88/D (D148), to the effect that compliance of clause 8 of UASL Guidelines submitted by the company may be sent as enclosure to MCA. Accordingly, I through my note dated 07.07.2008, now Ex PW88/D1, marked the file to my section. Sh. Madan Chaurasia thereafter, put up the substantial equity clause compliance filed by the company and recorded a note dated 15.07.2008, already Ex PW74/DD, requesting the approval of draft to be sent to MCA alongwith enclosure. The file was received by me through proper channel on 16.07.2008 and I, in turn, marked the file to DDG (LF) and the file thereafter, was marked to Secretary (T) through proper channel, who approved the draft as proposed by Sh. Madan Chaurasia, through his note, Ex PW74/DD. The signature of Sh. Sidharath Behura, the then Secretary (T) appears at point B, in respect of approving the said proposal. Thereafter, a fresh copy of the draft was prepared in the section and after signing by me, the same was sent to MCA.
The letter sent to MCA is already Ex PW74/A4, which bears my signature at point A. Since the reply of MCA was not received, a reminder was also sent to MCA on 21.10.2008, now Ex PW88/D2, which bears my signature at point A. The reply of MCA was received on 13.04.2009, which is already Ex PW70/A22. I marked this reply to my section for processing in the file. It bears my CBI Vs. Ravi Kant Ruia and others Page 164 of 526 endorsement at point B to this effect. Accordingly, a note was put up by Sh. Madan Chaurasia, SO (ASI) on 28.04.2009, already Ex PW70/A23 and this was placed before me through proper channel. Sh. Madan Chaurasia through this note proposed to issue a show cause notice to the company and also, put up a DFA in this respect for approval. I, through my note dated 29.04.2009, already Ex PW70/A24, marked the file to LA(T) for examining the contents of the letter of MCA and for vetting the DFA.
The LA (T) recorded his opinion on 05.05.2009 through his note, already Ex PW70/A25. After examining the matter, the LA (T) was not in favour of issuing of show cause notice as per DFA. This note of LA (T) was put up to me. However, we had some element of doubt in our mind, after MCA report, and that is the reason that we were proposing issuance of show cause notice. The file was received by me on 06.05.2009 and on that day, I was called by Member (F) alongwith file to discuss the matter, where DDG (LF) was also present. I brought to his notice another complaint dated 22.04.2009 of Sh. Ajay Chakraborty, Hon'ble MP (LS), received through PMO by that time. The complaint of Sh. Ajay Chakraborty is already Ex PW. 74/A7. The substance of the two complaints was same. On 06.05.2009 itself, a letter was received by Harish Kapoor, Chief Regulatory Officer of Loop Telecom Ltd, in the DoT. Member (F) proposed that Harish Kapoor may be called for discussion to which we both of us also agreed.
Accordingly, Harish Kapoor was called to DoT and a meeting with him took place in DoT on 15.05.2009 in the chamber of Member (F). My note of different dates from 06.05.2009 to 01.06.2009, reflect the same and the same is now Ex PW88/D3, including the holding the meeting of 15.05.2009. In the meeting, Director (ASI) was also present and he was to take the proceedings of the meeting on record. Accordingly, I marked the file to him.
CBI Vs. Ravi Kant Ruia and others Page 165 of 526Sh. A. K. Singh, ADG(ASI), thereafter, put up a note on 17.06.2009, already Ex PW70/A2, including, inter alia, the proceedings of 15.05.2009. It is a self contained note, through which the letter of Harish Kapoor, the complaints and the proceedings of meeting were taken on record, including the observation of DoT, inputs of MCA and submissions of the company. This note was placed before me through proper channel and I proposed for issuance of a show cause notice to the company through my note date 19.06.2009, already Ex PW70/A8. I marked the file to LA (T) for vetting of DFA to be sent to the company. One more meeting was also held on 06.07.2009 in the chamber of Member (F) as recorded, already Ex PW70/A9 at point D. In the meeting held in the chamber of Member (F), it was decided to reexamine the legal issues pertaining to clause 8. On the same day, LA (T) returned the file to me, recording on the file that the matter as discussed in the room of Member (F) may be processed further, though, it should have been done by him. His note is already Ex PW83/DA to this respect.
After receipt of the file from LA (T), I recorded my note on the same day, that is, 06.07.2009, already Ex PW70/DA, to the effect that matter may be further processed, and marked the file to Director (ASI). The Director (ASI) recorded that the matter is already under process and the discussion held by Member (F) was informal and general in nature. We may seek opinion of LA (T) as proposed above. His note is now Ex PW88/D4. He marked the file to me, I, in turn, marked the file to LA (T), through my note dated 14.07.2009, already Ex PW83/A. The LA(T) recorded his note dated 16.07.2009, already Ex PW70/A10, to the effect that since no new facts have been discussed in the pre note dated 17.06.2009 and 19.06.2009, his opinion dated 05.05.2009, already Ex PW70/A25, is reiterated and marked the file to me.
CBI Vs. Ravi Kant Ruia and others Page 166 of 526Thereafter, I put up a note dated 11.08.2009, already Ex PW70/A11, recommending again issuance of show cause notice to the company or in the alternative, to seek expert opinion of MCA before hand, who have expertise to pierce into the corporate veil. I was of the view that show cause notice should be given to the company. I submitted the file for administrative decision and marked the same to Member (T), Member (F) and Secretary (T). Member (F) recorded his note, Ex PW70/A12, approving a further reference to MCA and marked the file to Secretary (T). Sh. Sidharath Behura, the then Secretary (T), through his note, already Ex PW70/A13, recorded that "there is no reason why we cannot decide the matter conclusively, if we apply ourselves, which is our job. If necessary have a meeting of all concerned" and marked the file to Member (F), who in turn, marked the file to me. I had shown the file to Member (T) also as the file was not marked to him. Thereafter, I recorded my note on 18.08.2009, already Ex PW70/A14, to seek conclusive input of MCA on various complaints and marked the file to my section. Thereafter, Member (T) asked me to constitute a committee as per the directions of Secretary (T), as such, I proposed constitution of a committee through my note dated 20.08.2009, already Ex PW70/A16 and marked the file to Member (T) and Member (F) for approval. I had proposed that the committee may be chaired by Member (T). However, Member (T) suggested, if deemed fit, Secretary (T) may chair the committee, through his note dated 20.08.2009, now Ex PW88/D5. However, the committee could not be constituted and the licensing finance wing gave their opinion to issue the shown cause notice with certain modifications, through their note, already Ex PW74/A8, recorded by Manish Sinha, DDG(LF). The views of DDG (LF) were concurred by Adviser (F) and Member (F). However, Member (T) recorded that we may go by legal advice referred to CBI Vs. Ravi Kant Ruia and others Page 167 of 526 above, through his note, Ex PW76/A. The file was thereafter marked to Secretary (T), who agreed with Member (T) and recorded that question of issue of show cause notice does not arise, through his note, Ex PW74/A9 and this was finally approved by the then MOC&IT, through his note, Ex PW70/A17, subject to rider mentioned therein......"
266. It is clear from above deposition that despite repeated examination of complaint, the DoT could not reach a conclusion as to whether the company violated clause 8 or not. Sh. A. K. Srivastava deposed that they had an element of doubt about the eligibility of Loop Telecom Limited. Nowhere did he say that DoT explicitly felt that the company was in violation of clause 8. The opinion of LA (T) was sought twice. He opined that there was no violation by the company and, as such, he was not in favour of any action against the company, including show cause notice.
Examination of Complaint by MCA and its Opinion:
267. In the above deposition, PW 88 Sh. A. K. Srivastava also deposed about opinion of MCA, Ex PW 70/A22 dated 13.04.2009, and also about opinion of LA(T).
However, he very cleverly did not depose as to what the opinion of MCA was. He was content just with putting an exhibit on the opinion of MCA.
It is worthwhile to first take note of the opinion of MCA. When the complaint was referred to MCA, it was examined in MCA by Dy. Director (Inspection) PW 82 Sh. R. K. Meena. On examination of the complaint, he prepared a CBI Vs. Ravi Kant Ruia and others Page 168 of 526 detailed note dated 22.10.2008, Ex PW 82/A13 (D149). The relevant parts of which read as under:
"..........From the above, it is clear that Smt. Kiran Khaitan is the only shareholders of STPL. She alongwith her husband Shri Ishwari Prasad Khaitan are Directors of the company w.e.f. 30.6.2005 and indirectly owning interest in voting power of the company. It gives credence to the fact that some other individuals directly owning interest in voting power of the company are deemed Directors and deemed shareholders of STPL as defined in section 303 and 307 (10) (a) & (b) of the Companies Act, 1956. Therefore, ownership of STPL is not clear and it appears to be Essar related company since major unsecured loan in the form of Zero interest non convertible debentures are held by companies of Essar Group as per details given in paras 11 above. The allegation is that Essar Group has acquired LOI/License/Spectrum under the garb of Loop Telecom Pvt. Ltd. under the corporate veil.
To examine this allegation to its logical conclusion, the corporate veil should be pierced to ascertain real owners of STPL who are hiding themselves behind the corporate veil. We may also ascertain from State Bank of India which is a lender in Lop Telecom Pvt. Ltd. (LTPL) to intimate the names of individuals companies who have given counter guarantee, Financial Bank Guarantee and performance Bank Guarantee for loan given to the company to find out whether they are Essar related companies.
14. Intersee relationship among Loop Telecom Pvt. Ltd., BPL Mobile Communication Ltd., BPL Communications Ltd. and Santa Trading Pvt. Ltd.
M/s Loop Telecom Pvt. Ltd. is a majority owned subsidiary of M/s BPL Mobile Communication Ltd. which in turn is a majorityowned subsidiary of M/s CBI Vs. Ravi Kant Ruia and others Page 169 of 526 Santa Trading Pvt. Ltd. appear to be owned by Essar group. Shri Ashok Tyagi was one of the subscriber to the memorandum and its first Director has confirmed that STPL is a Essar's company. Shri Girish Sathe was shareholder and Director of the company till he resigned on 16.8.2007. Shri Sathe is also a shareholder of M/s BPL Mobile Communications Ltd. and M/s BPL Communication Ltd. Shri B. Shiv Kumar shareholders of M/s BPL Communication Ltd. is also appointed as Director of M/s Santa Trading Pvt. Ltd. on 2.9.2004 as per annual return made upto 30.9.2004. Shri S. Shankaranarayanan shareholder of M/s BPL Mobile Communication Ltd. is also appointed as Director of M/s Santa Trading Pvt. Ltd. on 2.9.2004. Further Ms. Sangeeta Lakhi was appointed as an additional director of M/s Santa Trading Private Ltd. w.e.f. 13.8.2007 and Additional Director of M/s Loop Telecom Pvt. Ltd. w.e.f. 16.8.2007 respectively. The inter se relationship discussed above among four companies suggest beyond doubt that they are Essar Group of Companies.
15. Whether Essar Group owns 33% shares in Vodafone Essar (VEL): If above four companies are established to be owned by of Hutchison Essar now known as Vodafone Essar (VEL) than Loops Telecom Pvt. Ltd. has violated the provisions of clause 8 of UASL guidelines dated 14.12.2005 regarding substantial equity under the corporate veil as it was not eligible to even apply for UAS Licence on 3.9.2007 for 21 service areas. Clause 8 of UAS licence guidelines dated 14.12.2005 defined "substantial equity" that "No single company/legal person either directly or through its associates shall have an equity holding of 10% or more in more than one Licensee Company in the same service area for the Access services. It is pertinent to mention that Ruia's of Essar Group and CBI Vs. Ravi Kant Ruia and others Page 170 of 526 Vodafone Essar (VEL) are locked in arbitration regarding ownership issue of M/s BPL Mobile Communication Ltd. which emanates from the fact that sometime in 20052006 Essar Group bought BPL Mobile on behalf of VEL, but has not transferred the company to the latter. There are two scenarios which could emerge out of ongoing arbitration proceedings - one in which the ownership of BPL is established to be that of Essar Group and the second in which the ownership is established to be that of VEL. In either situation, the provisions of clause 8 of UASL guidelines dated 14.12.2005 regarding substantial equity has been violated. Since VodafoneEssar (VEL) is already holding UAS Licenses in 23 Circles across the country (p. 248/cor) for the purpose of providing cellular mobile service and they also are the promoter/ partner/ shareholders of M/s Loop Telecom Pvt. Ltd. (LTPL) and as such cannot have stakes in more than one Licencee Company for the same service area. However, M/s Loop Telecom Pvt. Ltd. promoted by Essar group has also applied and got licence in 21 circles (p. 249/corr) for the purpose of providing Cellular mobile service in the same service area. This amount to violation of clause 8 of UASL guidelines dt. 14.12.2005 by Essar Group as they have acquired letter of intent/License/Spectrum under the garb of LTPL under the corporate veil. Article No. 14 C of Articles of Association of M/s Loop Telecom Private Ltd. provides that any violation of the terms and conditions of license agreement shall automatically lead to the company being unable to carry on its business in this regard and all the powers of the Board of Directors shall stand ceased except for the steps taken by the Board of Directors to cure the violation.
Submitted please."
268. Thus, Sh. R. K. Meena recorded in the above note CBI Vs. Ravi Kant Ruia and others Page 171 of 526 that there was violation of Clause 8 for the following reasons:
(i) That Kiran Khaitan and I. P. Khaitan, both directors, were indirectly owning interest in STPL and, as such, some other individuals directly owning interest in voting were deemed directors and deemed shareholders of STPL;
(ii) STPL appeared to be Essar related company since major unsecured loan in the form of zero interest non convertible debentures were held by companies of Essar Group and, as such, Essar group acquired licence/ spectrum under corporate veil. He suggested that corporate veil be lifted by ascertaining from SBI, lender to Loop Telecom Limited, as to who stood guarantee for the loan;
(iii) He also opined that STPL appeared to be owned by Essar group for following reasons also:
(a) That Sh. Ashok Tyagi, one of the subscribers to Memorandum of STPL, confirmed to him that it was an Essar company;
(b) That Sh. Girish K. Sathe, Sh. B. Sivakumar, Sh. S. Shankaranaraynan and Ms. Sangeeta Lakhi, connected with Essar group, were directors in Loop Telecom Limited;
He opined that for the reasons mentioned in (a) and (b), the four companies, that is, STPL, BPL Communications Limited, BPL Mobile Communication Limited and Loop Telecom Limited were companies of Essar group;
(iv) He also opined that if above four companies were established to be owned by Vodafone Essar Limited, then Loop Telecom Limited had violated clause 8 of Guidelines dated CBI Vs. Ravi Kant Ruia and others Page 172 of 526 14.12.2005;
(v) He also opined that Essar group and Vodafone Essar Limited were locked in arbitration for the reasons that in 200506, Essar group bought BPL Mobile Communication Limited on behalf of Vodafone Essar Limited, but did not transfer it to Vodafone and, as such, whatever may be the result of arbitration proceedings, clause 8 stood violated. That is, whether the company was owned by VEL or Essar group, clause 8 stood violated.
269. A bare perusal of this noting of Sh. R. K. Meena reveals that:
(a) It is entirely based on assumptions and presumptions;
(b) It takes note of an unconfirmed statement of Sh. Ashok Tyagi, who has been examined as DW 9 and denied this;
(c) No parameters of clause 8 have been discussed for claiming its violation;
(d) It takes into consideration extraneous matters like arbitration proceedings which are not part of the record, guarantors etc.;
(e) It referred to directors of STPL Sh. Girish Sathe, Sh. B. Sivakumar, Sh. S. Shankarnarayanan and Ms. Sangeeta Lakhi.
Sh. Girish Sathe has been examined as PW 58, Sh. S. Shankarnarayanan has been examined as PW 49 and Ms. Sangeeta Lakhi has been examined as PW 34. All three deposed that they were working for Sh. I. P. Khaitan. Sh. B. Sivakumar has been examined as DW 4. He also deposed that STPL belonged to Sh. I. P. Khaitan and he joined the board of STPL on CBI Vs. Ravi Kant Ruia and others Page 173 of 526 asking of Sh. I. P. Khaitan.
270. On recording his note, Sh. R. K. Meena marked the file upward. On 12.12.2007, Secretary (MCA) asked as to why there was delay in putting such an important note to him. He also recorded that the matter be looked into and submitted quickly.
On this, file again reached Sh. R. K. Meena and he recorded note dated 16.12.2008, Ex PW 82/DA, in which after briefly explaining the background of the above note, he again recorded a paragraph which reads as under:
"There appears to be grey area in this complaint and as such it is still under examination. On 11.11.2008, the reference matter was discussed with JSK and brief note as F/A is submitted for consideration."
Thus, subsequent to his earlier note, Ex PW 82/A13, Sh. R. K. Meena himself was not sure as to what the complaint was all about. He saw a grey area in the complaint. Thus, he nullified his earlier observations, whatever their worth, in note, Ex PW 82/A13 (D149), by dubbing the complaint to be in grey area.
271. On recording this note, he marked the file to Director (Inspection & Investigation) Sh. R. Vasudevan. He recorded note dated 10.01.2009, Ex PW 82/D, which reads as under:
"The details of shareholding pattern of various companies connected to Loop Telecom furnished by the ROCs of Delhi, Kerala and Karnataka were examined. Necessary copies of annual reports were also obtained and studied for coming to conclusion CBI Vs. Ravi Kant Ruia and others Page 174 of 526 as to whether Essar Group is having substantial equity in the Loop Telecom with reference to the conditions applicable for Unified Access Services Licence(s). Upon examination it is found that the position comes to following:
(i) direct shareholding of Essar Group in Loop Telecom is nil and indirect shareholding is 9.99% through BPL Mobile Communication.
(ii) the ultimate holding company of Loop Telecom namely STPL is not controlled by any one of the promoters of the Essar Group or BPL Communication;
(iii) While STPL has owes to various companies in Essar Group to the tune of 1592 crores by way of liability towards redemption of these debentures, it has investments in BPL Communications in the form of equity and preference shares, debentures of the same amount;
(iv) BPL Communications in turn has invested in multi optional convertible debentures made by Essar Investments Ltd. By this process amounts receivable by STPL are to be tune of Rs.2421 crores whereas the amount payable by STPL comes to Rs.1592 crores.
In the light of the above, even though Essar Group does not have substantial equity in Loop Telecom with reference to the conditions mentioned in UASL, the pattern of funding ultimate holding company namely STPL and the funding made by its subsidiary company namely BPL Communications Ltd. reflect a very close interconnection in funding the transactions between the companies.
In view of the above, DOT may take a view about Loop Telecom under UASL guidelines."
272. Thus, Sh. R. Vasudevan recorded that due to funding CBI Vs. Ravi Kant Ruia and others Page 175 of 526 transactions, there was close interconnection between the Essar group and Loop Telecom Limited. However, he advised the DoT to take a view about violation of clause 8 by Loop Telecom Limited as per UASL Guidelines. Thus, Sh. Vasudevan also did not give any definitive opinion. It may be noted that Sh. R. Vasudevan has been examined as DW 10.
273. On recording the aforesaid note, Sh. R. Vasudevan marked the file to PW 90 Sh. Jitesh Khosla, Joint Secretary, who recorded note dated 31.01.2009, Ex PW 82/D1, the relevant parts of which read as under:
"................................................................................. ...................................................................................
4. The position has been examined in detail with regard to the shareholding pattern, financial statements and annual returns of the companies in question. After detailed enquiry and consultations on the basis of records available, it is found as follows:
(a) The company Loop Telecom is owned, in turn, by another company Santa Trading Private Limited (STPL), which also owns BPL Communications and BPL Mobile Communications.
(b) The Essar Group does not have any direct equity in STPL/ Loop Telecom. It, however, holds 9.99% in Loop Telecom, indirectly.
(c) Essar Group, however, has invested into unsecured, nonconvertible debentures of STPL, to the extent of 1592 cr which is otherwise a small company having a paid up capital of Rs. 1 lakh only. STPL, in turn, has utilized these funds to invest in BPL Communications in the form of equity shares and unsecured debentures. BPL Communications, in turn, has invested in multioperational convertible debentures issued by Essar Investment Limited. As a CBI Vs. Ravi Kant Ruia and others Page 176 of 526 result of this chain of investments, STPL has receivables due, through BPL Communications, to the tune of 2421 Cr from Essar Investment Ltd. against an investment of 1592 Cr.
5. From the above, it appears that funds from the Essar Group have been routed through STPL and BPL Communications back to Essar Investments, in the process providing about 800 Cr of dues to STPL. Therefore, there are significant links and benefits arising to the STPL from the financial transactions, direct and indirect with the Essar Group. STPL, has operations/transactions which are substantially controlled or influenced by Essar Group.
6. The company Loop Telecom, apparently a recipient of a LOI/license for telecommunications, has received some indirect equity support from STPL via BPL Mobile Communications (9.9%), but this is not sufficient to demonstrate control through equity.
7. From the share holding pattern of related companies, it has seen that STPL holds 85.75% of BPL Communications, which in turn holds 73.99% of BPL Mobile Communications, which in turn holds 51.24% of Loop Telecom. The investment made by the Essar Group and others in STPL through non convertible debentures has gone to BPL Communications in the form of equity (1006 Cr), preference shares (175.8 Cr) and NCDs (410 Cr) totaling 1592 Cr. Therefore, STPL appears to have been a conduit for investment of these funds in BPL Communications, which is one of the main shareholder (48.76%) in Loop Telecom, with BPL Mobile Communications holding 51.2%.
Significantly BPL Communications holds 73.99% in BPL Mobile Communications.
8. Therefore, while Essar Group is not an equity holder in STPL, it has invested a huge amount in its CBI Vs. Ravi Kant Ruia and others Page 177 of 526 NCDs and it would appear that through the funding of STPL by the Essar Group, equity has been provided to BPL Communications, who is a 48% owner of Loop Telecom, though not directly to Loop Telecom.
9. Therefore, the above position may be provided to the Department of Telecom who may examine their policy and regulations for eligibility for grant of the relevant licenses in light of the same."
Bare perusal of the note reveals that it is also presumptive one, based on debt funding and 9.9% equity of BPL Mobile Communication Limited being held by Essar group.
Sh. Jitesh Khosla also did not give any definitive opinion and instead advised DoT to examine its policy and regulations for determining eligibility of Loop Telecom Limited for grant of UAS licences.
Reply by MCA to DoT
274. Sh. Jitesh Khosla marked the file upward and his note was approved by the then Minister, MCA and reply was sent on the above lines to DoT on 13.04.2009, Ex PW 82/D2 (Ex PW 72/A22 in D148). Reply was sent under the signature of Sh. R. K. Meena and relevant parts of which read as under:
".......With reference Ministry's letter of even number dated 19.12.2008 on the subject cited above, I am directed to say that issue of ownership/control of M/s. Loop Telecom Pvt. Ltd. by the Essar Group and linkage of this company with BPL Communications has been examined in detail with regard to the shareholding pattern, financial statement and annual returns of the companies in question. After CBI Vs. Ravi Kant Ruia and others Page 178 of 526 detailed enquiry and consultations on the basis of records available, it is found as follows:
(a) The company, Loop Telecom is owned, in turn, by another company Santa Trading Pvt. Ltd. (STPL), which also owns BPL Communication and BPL Mobile Communications.
(b) The Essar Group does not have any direct equity in STPL, Loop Telecom. It, however, holds 9.99% in Loop Telecom, indirectly.
(c) Essar Group, however, has invested into unsecured, nonconvertible debentures of STPL, to the extent of Rs. 1592 cr which is otherwise a small company having a paid up capital of Rs. 1 lakh only.
STPL, in turn, has utilized these funds to invest in BPL Communication in the form of equity shares and unsecured debentures. BPL Communication, in turn, has invested in multioperational convertible debentures issued by Essar Investment Ltd. As a result of this chain of investments, STPL has receivables due, through BPL Communication, to the tune of Rs. 2421 Cr from Essar Investment Ltd. against an investment of Rs. 1592 Cr.
(d) From the above, it appears that funds from the Essar Group have been routed through STPL and BPL Communications back to Essar Investments, in the process providing about Rs 800 Cr of dues to STPL. Therefore, there are significant links and benefits arising to the STPL from the financial transactions, direct and indirect with the Essar Group. STPL, has operations/ transactions which are substantially controlled or influenced by Essar Group.
(e) The company, Loop Telecom, apparently a recipient of a LOI/ license for telecommunications, has received some indirect equity support from STPL via BPL Mobile Communications (9.9%), but this is not sufficient to demonstrate control through equity.
(f) From the share holding pattern of related companies, it is seen that STPL holds 85.75% of BPL CBI Vs. Ravi Kant Ruia and others Page 179 of 526 Communications, which in turn holds 73.99% of BPL Mobile Communications, which in turn holds 51.24% of Loop Telecom. The investment made by the Essar Group and other in STPL through non convertible debentures has gone to BPL Communications in the form of equity (Rs 1006 Cr), preference shares (Rs 175.8 Cr.) and NCDs (Rs. 410 Cr) totaling Rs. 1592 Cr. Therefore, STPL appears to have been a conduit for investment of these funds in BPL Communications which in one of the main shareholder (48.76%) in Loop Telecom, with BPL Mobile Communications holding 51.2%.
Significantly BPL Communications hold 73.99% in BPL Mobile Communications.
(g) Therefore, while Essar Group is not an equity holder in STPL, it has invested a huge amount in its NCDs and it would appear that through the funding of STPL by the Essar Group, equity has been provided to BPL Communications who is a 48% owner of Loop Telecom, though not directly to Loop Telecom.
2. In the light of above, Department of Telecommunication, may examine their policy and regulations for eligibility for grant of Letter of Intent (LOI) to M/s. Loop Telecom Pvt. Ltd. for grant of UAS licenses."
Bare perusal of the reply/ opinion reveals that it is an exact replica of the note of Sh. Jitesh Khosla.
Thus, the reply/ opinion of the MCA was that DoT may examine its policy and regulations to determine eligibility of Loop Telecom Limited for issue of LOIs and grant of UAS licences. The reason for this was that Essar Group did not have equity in STPL and had only invested an amount of Rs. 1592 crore in NCDs issued by it (Loop Telecom). Thus, the reply of CBI Vs. Ravi Kant Ruia and others Page 180 of 526 MCA was of no help to DoT and it had to examine its own policy and regulations.
275. In order to prove violation of Clause 8 by Loop Telecom Limited and other accused, prosecution heavily relied upon MCA report, referred to above. In this regard, it examined PW 82 Sh. R. K. Meena and PW 90 Sh. Jitesh Khosla. Sh. R. K. Meena gave a long deposition in the Court about his note dated 22.10.2008, Ex PW 82/A13, wherein he asserted that there was violation of Clause 8 by Loop Telecom Limited. However, he very cleverly avoided to refer to his note dated 16.12.2008, Ex PW 82/DA, wherein subsequent to note, Ex PW 82/A13, he had himself dubbed the complaint to be in grey area. Furthermore, he did not depose about the parameters of Clause 8, which an applicant was required to meet and the breach of which would lead to violation of this clause.
276. It is useful to take note of deposition of PW 82 Sh. R. K. Meena, who in his examinationinchief dated 01.10.2013, pages 4 to 14, deposed as under:
"........On receipt of response from ROCs, the same were processed in the file by Sh. D. K. Sharma, through his note dated 22.09.2008. The same is now Ex PW 82/A12. After recording this note, he marked the file to me. I examined the matter in the light of various shareholding patterns of M/s Loop Telecom (P) Limited, BPL Communications Limited, BPL Mobile Communication Limited and other companies including STPL to examine the complaint. After examination, I recorded my note dated 22.10.2008, pages 3/N to 10/N. It bears my signature at point A and the note is now Ex PW 82/A13.CBI Vs. Ravi Kant Ruia and others Page 181 of 526
Ques: What did you find on examining the matter? Ans: After examination, I found that promoters of Loop Telecom (P) Limited had violated clause 8 of UASL Guidelines dated 14.12.2005. Essar group had acquired letter of intent/ licence/ spectrum under the garb of Loop Telecom (P) Limited under the corporate veil.
Ques: Kindly explain the reasons for arriving at the aforesaid conclusion?
Ans: Loop Telecom (P) Limited had applied for licence and its eligibility was to be examined as on date of application, that is, 03.09.2007. I have examined the shareholding pattern of Loop Telecom (P) Limited as on 30.07.2007 based on annual return made up to 30.07.2007. I found that Karthik Financial Services Limited was holding 51,49,870 equity shares and Girish K. Sathe and Karthik Financial Services Limited were holding 130 equity shares in this company, that is, Loop Telecom (P) Limited. Thereafter, I had seen the balance sheet of Loop Telecom (P) Limited of that period. In the related party transaction of this balance sheet as on 31.03.2007, I found that Ruias were indirectly owning interest in the voting power of this company.
I had seen the certificate issued by Sh. A. P. Rajgopalan and Co., Chartered Accountant, which shows that company had issued fresh shares on 31.08.2007. The certificate is now Ex PW 82/A14, page 154. I had also seen the certificate issued by V. V. Chakradeo & Co., dated 01.09.2007, which shows that BPL Mobile Communication Limited held 6,69,48,310 equity shares in the company, BPL Mobile Communication Limited with Sh. S. Subramaniam held 1690 equity shares in the company and BPL Communications Limited held 6,37,00,000 equity shares in the company. The certificate of Sh. V. V. Chakradeo is now Ex PW 82/A15, page 34. This shareholding includes the share transferred on 01.09.2007 by shareholders as referred above, that is, Karthik Financial Services CBI Vs. Ravi Kant Ruia and others Page 182 of 526 Limited and Girish K. Sathe alongwith Karthik Financial Services Limited to BPL Mobile Communication Limited and S. Subramaniam with BPL Mobile Communication Limited respectively. Ques: Kindly take a look on your note Ex PW 82/A13 and tell this Court as to what did you find after examining the above certificate and material? Ans: This shareholding pattern revealed that BPL Communications Limited held 48.76% equity shares in Loop Telecom (P) Limited and M/s BPL Mobile Communication Limited held 51.24% equity shares in Loop Telecom (P) Limited. This shows that Loop Telecom (P) Limited was subsidiary of BPL Mobile Communication Limited as on that date.
Further, I had examined the shareholding pattern of BPL Mobile Communication Limited, which is an operator in Mumbai service area. I had seen the shareholding pattern as received from ROC, Kerala. As per annual return made up to 26.04.2006 and 20.07.2007 of M/s BPL Mobile Communication Limited, M/s BPL Communications Limited held 73.99% equity shares, Capital Global Limited, Mauritius, held 16.1% equity shares and Essar Teleholdings Limited held 9.9% equity shares in the company. This shareholding pattern revealed that Ruias had 9.9% shares in BPL Mobile Communication Limited while BPL Communications Limited held 74% in BPL Mobile Communication Limited. Therefore, BPL Mobile Communication Limited was majority owned subsidiary of M/s BPL Communications Limited.
Ques: What else did you examine and find?
Ans: Then I examined the shareholding pattern of M/s BPL Communications Limited since it held 74% shares in BPL Mobile Communication Limited. I examined the annual return made up to 03.09.2007 of BPL Communications Limited, which revealed that Santa Trading (P) Limited held 80.70% equity shares in this company. This shareholding pattern revealed that BPL Communication Limited is a CBI Vs. Ravi Kant Ruia and others Page 183 of 526 majority owned subsidiary of M/s Santa Trading (P) Limited, registered with ROC, Maharashtra.
Further, I examined the financial and shareholding pattern of Santa Trading (P) Limited. I had seen annual return of STPL made up to 28.09.2007. It revealed that its issued, subscribed and paidup capital is only Rs. One lac divided into 10,000 equity shares of Rs. 10 each, fully paid up. On 28.09.2007, 9,999 equity shares were held by Ms. Kiran Khaitan of New Friends Colony, New Delhi and one equity share was held by Kiran Khaitan jointly with Ratanraj Packirajan, Mumbai. With this small paid up capital, a company had invested into the shares of BPL Mobile Communication Limited and BPL Communications Limited, which was not possible. Therefore, I examined the balance sheet of Santa Trading (P) Limited as on 31.03.2007. This revealed that company had issued 15,92,58,630 (previous year 3,04,00,000) zero interest non convertible unsecured debentures, which was found have been substantially subscribed by Essar companies. I observed that a prudential businessman will not finance in unsecured nonconvertible zero interest debentures in this small company and that too not listed in any stock exchange. These unsecured loans were subscribed by Essar Teleholdings Limited, Chennai, Essar Teleholdings Limited, Chennai, and Essar Investments Limited, besides others, on different dates. I observed that director's report dated 31.08.2007 attached with balance sheet as on 31.03.2007 of STPL revealed that it had purchased all the nonconvertible debentures (NCDs) of BPL Communications Limited (subsidiary company), which had agreed for the settlement of the entire amount due on the NCDs by subscription to the equity shares in BPL Communications Limited for an equivalent amount. I further observed that STPL's entire investment of Rs. 15,92,43,23,598/ is made in its subsidiary BPL Communications Limited in the equity shares, CBI Vs. Ravi Kant Ruia and others Page 184 of 526 preference shares and nonconvertible debentures of this company. This shows that funds of STPL were ultimately coming from Essar group companies and being invested in BPL Communications Limited, BPL Mobile Communication Limited and ultimately reached Loop Telecom (P) Limited in its equity. I found that to become eligible to apply for UAS licence, company needs to have some minimum capital base and that equity fund was provided ultimately by Santa Trading (P) Limited through its subsidiaries. In fact, this fund had been sourced from Essar companies.
Court Ques: Would it make any difference if a relative is helping his other relative to procure a UAS Licence in this manner or if it is an arms length transaction?
Ans: In business world, friends, relatives and associates do help in daytoday business depending upon their understanding and relations. As regard arms length transaction, I may say that a prudential businessman will not give such a huge money to its/ his business associates, relatives or friends without having safeguard for its interest on the amount. This interest can be safeguarded by getting the loans secured, some interest as agreed, orally or in writing, to have further business interest in the transaction. But this huge money is noninterest bearing, unsecured, nonconvertible and not listed in stock exchange and therefore, cannot be considered as arms length transaction. I do not know if any MoU is executed orally or in writing between the parties as it was not examined during the course of examination.
Court Ques: In the light of your examination, can such a huge transfer of money be considered as a bona fide help by one relative to another? Ans: I cannot say anything in this regard.
I further examined the balance sheet of STPL and found that its notes of accounts for the year ended on 31.03.2007 revealed related party CBI Vs. Ravi Kant Ruia and others Page 185 of 526 transactions of STPL and nature of relationship where control exists. M/s BPL Communications Limited, M/s BPL Mobile Communication Limited and BPL Communications (partnership firm) found subsidiary companies/ firm of STPL in this category. Further, individuals indirectly owning interest in voting power of STPL were Sh. Ishwari Prasad Khaitan and Smt. Kiran Khaitan. Here question comes as to how these individuals were owning indirect interest in the voting powers of the company (STPL). More so, when Ms. Kiran Khaitan is the major shareholder, holding 99% shares (9,999 equity shares) in the company. This further gives credence to the belief that someone under the corporate veil is owning interest in the voting power of the company. Though there may be some MoU of which I am not aware and this applies to my reply to the Court question also.
I examined this fact in the light of some powers of the company exercised by deemed directors and deemed shareholders of STPL, as defined in Sections 303 and 307 (10) (b) (ii) of the Companies Act 1956.
At this stage, the witness submits that he may be allowed to see Companies Act. Objected to by Sh. S. V. Raju, learned Sr. Advocate, on the ground that witness is giving his statement by reading his note and that the provisions are statutory provisions and can be looked into by the Court. The objection is countered by the learned PP on the ground that the witness is not desirous of quoting the provisions of the law but only wishes to state as to under which provisions he examined the facts.
Court Order: Witness is at liberty to refresh his memory, both with regard to facts as well as law.
At this stage, the witness has seen the Companies Act and had only carried out a minor correction in the subsection of the provisions referred to above.
I observed that Ms. Sangeeta Lakhi was CBI Vs. Ravi Kant Ruia and others Page 186 of 526 appointed as additional director in STPL and Loop Telecom (P) Limited somewhere in August 2007 and before the applications were moved to DoT for the licence. Further, I noticed that majority of the past directors of Loop Telecom (P) Limited had resigned on 16.08.2007 and new directors had joined in the company in their place. I had also noticed that earlier directors on the board of Loop Telecom (P) Limited had connection with Essar group as they were/ are directors in its other companies. It shows that to cover Loop's connection with Essar group, they had been resigned and in their place new directors were inducted which were also directors in STPL. Further, I noticed that Ms. Kiran Khaitan and her husband Sh. I. P Khaitan were having controlling interest in the voting power of Loop Telecom (P) Limited, as defined under Section 310 (b)(ii) of the Companies Act 1956. Therefore, if Ms. Kiran Khaitan is indirectly owning interest in the voting power of STPL, as revealed from the balance sheet of the company as on 31.03.2007, then someone must be directly owning interest in the voting power in the company in the light of the fact that Ms. Kiran Khaitan is holding 9,999 equity shares in the company, that is, 99% shares. It appeared that Essar group, who was hiding itself behind the corporate veil, had not only financed substantially to STPL but had also given huge corporate guarantee for the loan of Rs. 750 crore taken by Loop Telecom (P) Limited from SBI, was directly controlling and owning interest in the voting power of STPL, which is an ultimate holding company of Loop Telecom (P) Limited.
I also observed inter se relationship amongst Loop Telecom (P) Limited, BPL Mobile Communication Limited, BPL Communications Limited and Santa Trading (P) Limited. For this, I had seen memorandum of association and also found that Sh. Ashok Tyagi was one of the subscribers to the memorandum and first director of CBI Vs. Ravi Kant Ruia and others Page 187 of 526 STPL. In MCA, Sh. Ashok Tyagi happened to come in connection with some other work and I casually inquired whether he was subscriber to the memorandum of STPL and its first director. Sh. Ashok Tyagi confirmed the same and further stated that it was an Essar company. Besides, Sh. Girish Sathe was shareholder and director of Loop Telecom (P) Limited till he resigned on 16.08.2007. This I had noticed from company's record maintained in MCA system. Sh. Girish K. Sathe was also a shareholder of BPL Mobile Communication Limited and BPL Communications Limited during that period. I also noticed from the annual return and balance sheet of Loop Telecom (P) Limited that Essar Investments Limited had invested in debentures of Loop Telecom (P) Limited by way of subscribing its debentures of the value of Rs. 44 lacs. This was revealed in the company's document available in MCA portal.
The examination of inter se relationship revealed, beyond doubt, that Essar group was indirectly supporting STPL, which is the ultimate holding company of Loop Telecom (P) Limited.
Clause 8 of UASL Guidelines dated 14.12.2005 defines substantial equity that no single company/ legal person either directly or through its associates shall have an equity holding of 10% or more in one licencee company in the same service area for the access service. Ruias of Essar group and Vodafone Essar (VEL) were locked in arbitration battle as revealed from the complaint of Janhit Morcha regarding ownership issue of BPL Mobile Communication Limited. This emanates from the fact that sometime in 200506, Essar group bought BPL Mobile Communication Limited on behalf of VEL, but had not transferred the company to the later. Two scenarios which could emerge out of the ongoing arbitration proceedings: one, in which the ownership of BPL is established to be that of Essar group and the second, in which the ownership is CBI Vs. Ravi Kant Ruia and others Page 188 of 526 established to be that VEL. In either situation, the provisions of clause 8 of UASL Guidelines dated 14.12.2005 regarding substantial equity has been violated. Since VEL was already holding UAS licences in 23 circles across the country, as mentioned in the complaint, for the purpose of providing cellular mobile service as they are also promoters/ partner/ shareholder of M/s Loop Telecom (P) Limited and, as such, it cannot have stakes in more than one licencee company for the same service area. If the ownership of BPL Communication Limited was held in arbitration with the Essar group, then also the clause would stand violated as Essar was having more than 10% stake in VEL..........."
In this long deposition, he only explained his note Ex PW 82/A13, which as noted earlier was based on presumptions, speculation and extraneous material only.
277. It is also useful to take note of his crossexamination dated 03.10.2013, pages 6 to 10, which reads as under:
"........It is correct that I had access to the relevant record of Loop Telecom (P) Limited, STPL, BPL Mobile Communication Limited and other companies concerned in the case. It is correct that when I prepared my note Ex PW 82/A13, I had gone through the relevant record.
Ques: Did you make any inquiry or you just went by the record available with you?
Ans: The complaint was referred to Registrar concerned and their report was received in Ministry regarding shareholding pattern etc., of companies involved. I found the report of ROC concerned was not cogent enough to examine the veracity of the complaint received from DoT. I had examined various documents of companies involved from MCA portal, telephonically discussed with ROC CBI Vs. Ravi Kant Ruia and others Page 189 of 526 concerned, discussed with colleagues in the Ministry and happened to discuss with one of the professional who visited around that time and was one of the first directors on the board of Loop Telecom (P) Limited. I did not conduct any inquiry beyond this. Ques: I put it to you that when you prepared your note, you were not sure that STPL was an Essar group company and you were unsure of its true ownership?
Ans: After I prepared my note, I had stated the ownership of STPL was with Ms. Kiran Khaitan and jointly with another person, who was connected with Essar group. I was not sure that STPL was an Essar group company as its ownership was not with Essar, but 99% shareholders stated in the related party transaction that they were not owning direct interest in the voting power of this company, then question comes and I understood that somebody else, other than the owner, was operating the affairs of the company.
Court Ques: Could you please tell who was that other?
Ans: The companies of Essar group which have substantially financed by way of subscribing in the nonconvertible debentures floated by STPL were those people who were operating the affairs of the company.
Ques: On what basis did you come to this conclusion?
Ans: STPL was a small company having paid up capital of Rs. One lac. No company with this paid up capital can venture to invest such a huge money in BPL Communications Limited. So, STPL got funds of Rs. 1592 crore approximately from Essar group of companies and it was ultimately used to finance BPL Communications Limited, which, in turn, was holding company of BPL Mobile Communication Limited, which, in turn, was holding company of Loop Telecom (P) Limited.
Ques: Is it your inference or you had some material?CBI Vs. Ravi Kant Ruia and others Page 190 of 526
Ans: This inference was drawn from documents filed by these companies and examined by me during the examination of complaint. Ques: Was the inference based on investment, as referred to above by you, or there was some other material also?
Ans: I observed inter se relationship amongst these companies and Essar group companies besides the investment.
Some of the inter se relationships have been discussed by me in my note Ex PW 82/A13. Ques: Could you please tell some of the relationships which have not been mentioned by you in your note?
Ans: Sh. B. Shivkumar, shareholder of BPL Communications Limited was company secretary of Essar Investments Limited. Sh. Girish Sathe and Sh. V. Ganesan were additional directors of Loop Telecom (P) limited appointed in 200506 and they were also connected with Essar group companies. Sh. Girish Sathe was company secretary in Essar Teleholdings Limited. Sh. S. Shankarnaryanan, shareholder of BPL Mobile Communication Limited, was connected with Essar group companies as director or shareholder/ employee in their companies.
On seeing the balance sheet of Essar Investments Limited, I found that Sh. B. Shivkumar was its company secretary. It was balance sheet pertaining to that period, perhaps to one of the years from 200506 to 200607. Ms. Sangeeta Lakhi was inducted as additional director on the board of Loop Telecom (P) Limited.
Ques: Did you notice any other factor apart from investment and common employees/ directors? Ans: As far as I remember, Essar people visited Ministry and approached me for help in this examination. This is another ground which gave credence to the belief that it is Essar group interested matter.CBI Vs. Ravi Kant Ruia and others Page 191 of 526
Court Ques: What do you mean by "help" and who asked you for that?
Ans: I do not remember their names, but recollect that two persons approached me seeking favourable note in the complaint matter.
Ques: How did you say that they were Essar people when you even do not remember their names? Ans: A visiting card given to me by one of them made me understand that they belonged to Essar group.
Ques: You being a senior Government officer and if approached by someone in this manner, would not you take this on record and inform your senior officers?
Ans: My note was for findings of the complaint matter and such discussion. However, I did not find the aforesaid discussion with Essar people fit to be recorded........."
In his further crossexamination, pages 12 and 13, he deposed as under:
"........It is correct that one of the key factors for my note is the huge investment by Essar group companies in STPL. It is correct that as per balance sheet for the year ended on 31.03.2006 of STPL, already Ex PW 15/A, the investment of Essar companies in STPL was Rs. 304 crore. It is correct that as per the balance sheet as on 31.03.2007, already Ex PW 15/B (D58), this investment was to the tune of Rs. 1592,58,63,000/. It is correct that as per terms and conditions 3 and 4 to this balance sheet, Essar was guaranteed an option to redeem the debentures on premium. It is correct that as per these terms and conditions if the company, that is, STPL, repaid the debentures, it had to pay premium to Essar companies, the debenture holder........"
278. A bare perusal of testimony of Sh. R. K. Meena CBI Vs. Ravi Kant Ruia and others Page 192 of 526 would reveals that he relied upon extraneous considerations in arriving at a finding that STPL was an "Associate" of Essar group. These extraneous factors include use of name of Sh. Ashok Tyagi, issue of debentures by STPL, help sought by Essar people from him, directors in STPL etc. Hence, there is no merit in the evidence of Sh. R. K. Meena and consequently, it is of no help to the prosecution.
279. Furthermore, the shallowness of the note of Sh. R. K. Meena is further reflected by the fact that he recorded that Ms. Kiran Khaitan, alongwith her husband Sh. I. P. Khaitan, were directors in the company w.e.f 30.06.2005 and were, as per annual reports, indirectly owning interest in voting power of the company. He also recorded that it gave credence to the fact that some other individuals directly owning interest in voting powers of the company were deemed directors. However, this view is not only presumptive but also lacks credibility. In this regard, examinationinchief of PW 15 Sh. R. Kirthivasan, chartered accountant to Loop Telecom Limited, is relevant. It is this witness who had prepared the annual reports of the company. In his examinationinchief, he explained the concept of "individuals indirectly owning interest". His examinationin chief dated 03.10.2012, pages 3 to 5, reads as under:
"........Similarly, I have been shown certified true copy of financial account of Santa Trading (P) Limited (D58, Annexure 3B), which comprises audit report, balance sheet and notes to accounts for the financial year 200607. The same is now collectively Ex PW 15/B, running into ten pages.
Similarly, I have been shown certified true CBI Vs. Ravi Kant Ruia and others Page 193 of 526 copy of financial account of Santa Trading (P) Limited (D58, Annexure 3C), which comprises audit report, balance sheet and notes to accounts for the financial year 200708. The same is now collectively Ex PW 15/C, running into fourteen pages. The audit of this company for all the three financial years was conducted by me alongwith my audit assistant. All three documents bear my signature at point A. Ques: In para 4 (b) of notes to accounts to your reports Ex PW 15/B and 15/C for the financial years 200607 and 200708, it is mentioned that Ms. Kiran Khaitan and I. P. Khaitan are individuals indirectly owning interest in voting power of the company. Please explain what does it signify and based on what record you recorded this information? Ans: Accounting Standard 18 requires to give disclosure in the audited account of all related parties, their relationship with the company, details of key managerial personnels and details of transaction of related parties mentioned herein before. This information was extracted from the secretarial records of the company, which gives details of shareholding pattern of the company and from the shareholding, the details of the holding company, subsidiary company and associate companies of this company. We went through those accounts after stating these details of the related parties to check out whether any transaction has happened with these parties and have given details of these transactions as has been mentioned in our reports Ex PW 15/B and 15/C .
As per the balance sheets for the years 200607 and 200708, Kiran Khaitan was having 9,999 shares in Santa Trading (P) Limited. The remaining one share was held by one nominee shareholder alongwith Kiran Khaitan. The name of I. P. Khaitan figures in these reports as he was a director in the company.
Ques: You have used the description "individuals CBI Vs. Ravi Kant Ruia and others Page 194 of 526 indirectly owning interest in the voting power of the company" in your aforesaid reports. Please explain whether it refers to 9,999 shares or the remaining one share, jointly held by Kiran Khaitan and a nominee shareholder, or to both?
Ans: The clause, as such, refers to individuals, directly or indirectly, owning interest in the voting power of the company.
In the case of Kiran Khaitan, indirectly refers to one share which she is holding alongwith nominee shareholder and in the case of I. P. Khaitan it refers to entire 10,000 shares, which are being held by Mrs. Kiran Khaitan alongwith nominee shareholder.
Ques: In para 2 (iii)(B) of notes to accounts to your report Ex PW 15/A for the financial year 200506, it is mentioned that Ms. Kiran Khaitan and I. P. Khaitan are individuals directly/ indirectly owning interest in voting power of the company. Please explain as to why the word "directly" have been used in this report when this word does not find mention in the remaining two reports, that is, Ex PW 15/B and 15/C?
Ans: It is a typographical mistake. The word "directly" must have also been used in the remaining two reports. However, meaning and intent of Accounting Standard 18 has been followed in these reports by using only the word "indirectly" and the typographical error is not of much significance.
A shareholder has a right to vote. I. P. Khaitan was an individual having an indirect interest in the voting power being a director as well as husband of Kiran Khaitan. I have not come across any document regarding any arrangement, but in normal Indian circumstance of relationship between husband and wife, the same is construed to be true as the husband may exercise his influence over his wife....."
280. Thus, he explained that "individual indirectly CBI Vs. Ravi Kant Ruia and others Page 195 of 526 owning interest" refers to husband in case of wife and wife in case of husband and not any other person regarding which no document showing any arrangement is available on record. This view was not challenged by the prosecution. Moreover, this view appears to be reasonable one.
281. Sh. Jitesh Khosla, the then Joint Secretary, MCA, was examined as PW 90. Relevant part of his examinationin chief dated 11.12.2013, reads as under:
"I was posted in Ministry of Corporate Affairs between 2004 and 2009 as Joint Secretary. I have been shown MCA file, already Ex PW 82/A (D149), wherein my attention has been invited to a letter dated 05.08.2008 of DoT, now Ex PW 90/A. This letter was received in the MCA. It bears my endorsement at point A directing the examination of the issue referred in this letter. The issues mentioned in the letter were examined in MCA. After examining the issues, a response was sent to the DoT.
I have been shown my note dated 31.01.2009, already Ex PW 82/D1. It bears my signature at point A and I recorded this note about the findings of MCA and put up the same to the Secretary, MCA, who agreed with the same and in turn put up the same before the Minister, MCA. This note was approved by Minister at point B. The signature at point C is that of the Secretary.
During recording of the aforesaid note, inter alia, I had also seen Accounting Standard (AS) 18, a copy of which is already Ex PW 15/DA (D398). These are the same standards which were seen by me as a general reference material........"
Sh. Jitesh Khosla did not say anything significant except proving his note Ex PW 82/D1, already referred to CBI Vs. Ravi Kant Ruia and others Page 196 of 526 above. In his examinationinchief also, he deposed that he had seen AS18 while recording his note. However, that is not mentioned in his note as to what material was seen by him. In the end, his note also is noncommittal as nothing confirmatory was recorded therein. In this note he also left the matter to be decided by DoT.
282. In the end, note Ex PW 82/A13, recorded by Sh. R. K. Meena also does not matter at all for the reason that it is the ultimate opinion of department which matters and not individual opinion of the officers. In the instant case, the final opinion of MCA, Ex PW 82/D2, was also noncommittal. Thus, the view of Sh. R. K. Meena lost all significance, which is otherwise also based on extraneous material. In this regard, it is instructive to take a look on the law reported in an authority Mangal Amusement Park (P) Ltd. & Anr. Vs. State of Madhya Pradesh & Others, 2012 IX AD (SC) 98, in which while dealing with a similar issue, Hon'ble Supreme Court in paragraph 23 observed as under:
".......One has to recognise that where different authorities are dealing with a particular subject, it is quite possible that on some occasions, they may take a stand different from each other, though ultimately it is the decision of the competent authority which matters......."
Similarly, in an another authority reported as Sethi Auto Service Station and another Vs. DDA and others, (2009) 1 SCC 180, while dealing with the legality of a noting, Hon'ble Supreme Court observed in paragraph 14 as under:
CBI Vs. Ravi Kant Ruia and others Page 197 of 526"It is trite to state that notings in a departmental file do not have the sanction of law to be an effective order. A noting by an officer is an expression of his viewpoint of the subject. It is no more than an opinion by an officer for internal use and consideration of the other officials of the department and for the benefit of the final decision making authority. Needless to add that internal notings are not meant for outside exposure. Notings in the file culminate into an executable order, affecting the rights of the parties, only when it reaches the final decisionmaking authority in the department, gets his approval and the final order is communicated to the person concerned."
283. It is clear that MCA did not give any definitive opinion about violation of Clause 8 and this was agreed to by the then Joint Secretary Sh. Jitesh Khosla, Secretary, MCA, as well as the then Minister, MCA. Thus, the note as well as deposition of Sh. R. K. Meena stands nullified in toto on this ground also.
284. The DoT also understood the report of MCA in the same manner, that it was noncommittal. In this regard, deposition of PW 77 Sh. R. Ashok, Member (F) is relevant, who in his examinationinchief dated 23.09.2013, page 2, deposed as under:
"......The issue of crossholding is complex and since the earlier opinion obtained from MCA did not throw any light on the subject and with the new fact of the legal advisor giving his categorical opinion, it was decided in finance that it would be appropriate to send the legal opinion alongwith with the case file to the MCA for their opinion again. The Secretary (T) Sh. Sidharath Behura overruled this CBI Vs. Ravi Kant Ruia and others Page 198 of 526 and he directed that department could itself decide it......"
Thus, the DoT also understood that the MCA report did not clarify anything. The DoT also understood that the opinion of LA (T) was categorical. This is a fact also, as the report of MCA was not only based on extraneous considerations but also did not give any definitive opinion and left the matter to DoT advising it to examine its policy and procedure. Thus, no reliance at all can be placed on this report.
285. Five officers of MCA have been examined as witnesses, namely, PW 37 Sh. Subhash P. Chuga, PW 73 Ms. S. Meenakshi; Dy. Registrar, PW 82 Sh. R. K. Meena, PW 86 Sh. R. S. Meena and PW 90 Sh. Jitesh Khosla; the then Joint Secretary; MCA. However, the evidence of these witnesses is of no help to the prosecution at all. In the end, the opinion of MCA carry no value in the eyes of law.
Defence Evidence about MCA Report
286. It is also interesting to take a look on defence witnesses also.
DW 9 Sh. Ashok Tyagi, who was once a Group Manager (Legal) and Company Secretary in Essar group, was subscriber to the Memorandum of Association of On Channel Software (P) Limited, later on Loop Telecom Limited, and was also on its board of directors when the company was incorporated in 1997. However, he resigned as director in 2000. He left Essar group in 2002. In his examinationinchief he CBI Vs. Ravi Kant Ruia and others Page 199 of 526 described as to how Sh. R. K. Meena used his name for stating that this company belonged to Essar group. The relevant part of his examinationinchief dated 28.08.2014, pages 2 and 3, reads as under:
"........I know Sh. R. K. Meena, who was posted in 2008 as an officer in Ministry of Corporate Affairs, Government of India, New Delhi, as I am a practicing company secretary. I am a regular visitor to Shastri Bhawan, New Delhi, which houses the office of MCA, in my capacity as a practicing company secretary. One day in 2008, I came across Sh. R. K. Meena while walking in the corridor of Shastri Bhawan. He requested me to come to his cabin. He was working on some files at his desk. One more gentleman was sitting in his cabin, may be helping him.
I have been shown memorandum and articles of association of Shipping Stop Dot Com (India) (P) Limited in file Ex PW 82/A (D149), pages 48 to 76. These memorandum and articles were drafted by me during my tenure with the company and are correct and the same are now Ex DW 9(A6)/X. My name figures in these papers at pages 62 and 76, at point A. He showed me a copy of these memorandum and articles and invited my attention to my name figuring therein. On looking at the papers, I came to know that it is the same company, that is, Onchannel Software (P) Limited, but its name has since been changed to Shipping Stop Dot Com (India) (P) Limited. He asked me whether Shipping Stop Dot Com (India) (P) Limited is a company of Essar. I told him that as long as I was on the board, it was an Essar company and I do not know the subsequent position, including its ownership and activity. The gentleman sitting over there, whose name I do not remember now, also interjected saying : "Is it still an Essar company?" I told him whatever I told to Sh. R. K. Meena. However, this gentleman may be from CBI Vs. Ravi Kant Ruia and others Page 200 of 526 Uninor, as far as I can recollect. I was formally introduced to him by Sh. R. K. Meena and I was also introduced to this gentleman and that is the reason I came to know of his name and his association with Uninor, though I do not recall his name now.
In last quarter of 2013, Sh. R. K. Meena called me on my mobile No. 9810070575 informing me that he has deposed about the matter involved in the 2G case. He also informed me that while making statement before the Court, he has disclosed my name also in this matter in reference to company being an Essar group company. He also requested me that I should not speak anything which may contradict this. On this, I replied to him that no Court has called me, so why should I go and say anything........"
Thus, Sh. R. K. Meena used a casual conversation with Sh. Tyagi in support of his conclusion in note Ex PW 82/A13.
There is nothing of any significance in the cross examination which could discredit the evidentiary value of his testimony.
287. DW 10 Sh. R. Vasudevan, the then Director (Inspection and Investigation), MCA, also deposed about the examination of complaint of Janhit Morcha by MCA. He was senior to PW 82 Sh. R. K. Meena. He deposed that the observations of Sh. R. K. Meena were factually incorrect. The relevant part of his examinationinchief dated 05.09.2014, pages 3 to 8, reads as under:
"........In the note Ex PW 82/A13 recorded by Sh. R.K. Meena, which note also came to me, he has drawn conclusion on the basis of facts recorded in CBI Vs. Ravi Kant Ruia and others Page 201 of 526 the note but I do not agree with this conclusion for the reason that the material was inadequate for coming to any definite conclusion and also the conclusion is factually incorrect. The conclusion is factually incorrect for the reason that there is no indirect shareholding by anyone other than Smt. Kiran Khaitan and the loan transactions between the companies in Essar group have been mixed up without any basis. In view of fact that there is a direct shareholding by Smt. Kiran Khaitan along with her nominee of the entire share capital of Santa Trading (P) Limited, the question of any other indirect shareholding by anyone does not arise. Ques: What is the procedure followed in MCA when a senior disagrees with a note recorded by his junior?
Ans: When a note of a junior officer is complete in all respects with reference to facts and the documentary proof, he (senior) records his views agreeing or disagreeing with the views of the junior officer. If the facts are incomplete or needs additional examination the officer concerned is called upon to collect the necessary material and documentary proof and give a revised note, either in writing or orally. With a view to quicken the process, the officer concerned is normally told orally to correct his deficiencies and come up with a fresh note, pointing out relevant inadequacies. Ques: With reference to para 14 of note Ex PW 82/A13, what was your discussion with Mr. R.K. Meena after this note was marked to you? (Objected to by Ld. Sr. PP on the ground that discussion visavis facts have not been stated by the witness and the defence is trying now to put certain facts to the witness as if there was disagreement of the witness with Sh. R.K. Meena on those facts. As such, this question cannot be put, as the witness himself has not stated about his disagreement on these facts with Sh. R.K. Meena, which is rebutted by Sh. S.V. Raju, learned Sr. Advocate submitting CBI Vs. Ravi Kant Ruia and others Page 202 of 526 that the witness has already spoken about inadequacies in the note).
Court Order: Objection overruled.
Ans: The entire contents of para 14 has been wrongly mentioned as they are totally irrelevant to the control of Loop Telecom (P) Limited after it came to be controlled by Santa Trading (P) Limited on 31.08.2007. The facts mentioned in para 14 are of the period prior to this date and hence, not relevant and this is one of the points I mentioned earlier as not supported by proper documents. Court Ques: Did you record this fact anywhere in the file or it is just an afterthought? Ans: This was one of the points, pointed out to Mr. R.K. Meena during discussions and he was asked to record only the relevant facts. However, I did not record this anywhere in the file for the reason that file would get unnecessarily stuck up during its processing.
Note dated 10.01.2009, already Ex PW 82/D was recorded by me and before recording this note, I had seen documents mentioned in the note, that is, shareholding pattern, annual reports which included balance sheets of all the relevant companies for studying as to whether Essar group is having substantial equity in Loop Telecom (P) Limited. Ques: For examining "control" of a company, what is required to be looked at?
Ans: Under the Companies Act, a company can be controlled either by majority of shareholding of that company or by an article in the Article of Association of the company giving specific rights to anybody to control the company or by any agreement between the company and the person to whom control is proposed to be given, for example, a loan agreement, in which control is proposed to be given by virtue of subsistence of the loan agreement. Ques: In your note Ex PW 82/D dated 10.01.2009, you have concluded that the ultimate holding of Loop Telecom (P) Limited, namely, STPL is not CBI Vs. Ravi Kant Ruia and others Page 203 of 526 controlled by any of the promoters of the Essar group or BPL Communication. On what basis, did you so conclude?
Ans: On the basis of shareholding pattern of Loop Telecom (P) Limited ascertained from the MCA portal and mentioned in the note at pages 3/N to 8/N of Sh. R.K. Meena already Ex PW 82/A13, it is actually that STPL is controlling Loop Telecom (P) Limited and not controlled by any of the promoters of the Essar group or BPL Communication. Ques: Apart from shareholding pattern, did you examine anything else?
Ans: I had examined the annual reports of all the relevant companies to see any other financial transactions or holdings which can directly or indirectly show any controlling interests in the company Loop Telecom (P) Limited. On the basis of the said examination, it was noticed that there were transactions between Santa Trading (P) Limited and BPL Communications in the nature of holdings of debentures between the companies, to be very precise, BPL Communications had invested in the multi option convertible debentures issued by Essar Investments to the tune of about Rs. 2421 Crores prior to subscription of non convertible debentures to the tune of Rs. 1592 Crores by Santa Trading (P) Limited. In view of above fact that the amount owed by Essar to STPL is on higher side, the subscription to the issue of nonconvertible debentures by STPL does not lead a conclusion that it is controlled by Essar group.
Court Ques: How can one indirectly control a company?
Ans: As I have already mentioned, the indirect control can come if there is an enabling provision in the Articles of Association of a company, giving such a right to control a company to anyone. Indirect control can also be established by entering into agreement with anyone including an individual. It can also come through pumping money into a CBI Vs. Ravi Kant Ruia and others Page 204 of 526 company by means of loans, debentures, credit etc. Ques: In the instant case, while examining the complaint, did you find any such indirect control? Ans: No such indirect control was found by me when I examined the file.
Court Ques: Whether pumping of money per se confers control or something more than that is required?
Ans: Money would always come through an agreement, though in common parlance, it may be called pumping of money but there is no such concept in Companies Act and the control would be determined by understanding the nature of the loan agreement........."
In his crossexamination dated 05.09.2014, page 11, DW 10 deposed about corporate veil as under:
"........It is correct that the reference from DoT was for critical examination of the matter and not for routine examination. It is correct that MCA was required to go behind corporate veil. It is also correct that for this reason different information was collected from different field offices of ROC. It is correct that this collected information as well as information available at MCA portal was examined........."
In his further crossexamination dated 15.09.2014, pages 3 and 4, he deposed as under:
".........Details mentioned in point iii & iv of my note, Ex PW 82/D, were culled out by me from the balance sheets and the annual reports of all the connected companies, whereas Sh. R.K. Meena's note confined itself to the balance sheet of STPL, but these documents stated by me are not part of the file. It is wrong to suggest that Sh. R.K. Meena also analyzed things on the basis of annual reports of all CBI Vs. Ravi Kant Ruia and others Page 205 of 526 connected companies. Volunteered : I further say that Sh. R.K. Meena's note mentions only shareholding pattern of all the companies but not the details available from the balance sheets of those companies.
I did not mention anywhere in the file that the material was inadequate to arrive at any definite conclusion, though I called Sh. R.K. Meena for discussion. I did not record anywhere specifically that conclusions of Sh. R.K. Meena were wrong but the conclusion of my note points out to that. It is wrong to suggest that I failed to understand the documents pertaining to the complaint. It is further wrong to suggest that I even failed to understand the direct and indirect shareholding of Loop Telecom Limited as pointed by Sh. R.K. Meena. It is further wrong to suggest that for this reason, I could not specifically rebut the conclusions of Sh. R.K. Meena.
Date of 31.08.2007, Ex PW 82/A13, does not find mention in Sh. R.K. Meena's note, para 14. Ques: Where have you mentioned that the investment made by BPL Communications to the tune of Rs.2421 Crore in Essar Investments Limited was prior to subscription made by STPL to the tune of Rs.1592 Crore?
Ans: This is selfexplanatory from para (iv) of my note, Ex PW 82/D .
It is wrong to suggest that I am evasive in my replies.
It is correct that in my note, I recorded that funding pattern reflects close interconnection between the companies......."
288. It is clear from the perusal of record that the deposition of Sh. R. Vasudevan matches with the record and reliance can safely be placed on it. On the contrary opinion of Sh. R. K. Meena is speculative and contrary to record.
Accordingly, I have no hesitation in rejecting the CBI Vs. Ravi Kant Ruia and others Page 206 of 526 deposition of Sh. R. K. Meena regarding violation of Clause 8 by Loop Telecom Limited in its entirety. In view of this, the MCA report looses all significance in the eyes of law and is of no avail to the prosecution. Prosecution case can fail on this ground alone as it is almost entirely based on MCA report.
Legal Opinion of LA (T)
289. On receipt of opinion of MCA, AS Branch headed by Sh. A. K. Srivastava, which is also the licensing branch, instead of examining its own policy and procedure as suggested by the MCA, decided to seek the opinion of Legal Adviser (T). Legal Adviser (T) PW 83 Dr. Santokh Singh gave his opinion dated 05.05.2009, Ex PW 70/A25 (D148), in which he was of the view that there was no violation of clause 8. His report reads as under:
"The matter has been discussed with DDG (ASI) and Director (ASI).
2. DoT (ASI Division) received a complaint th dated 5 Feb. 2008 from Janhit Morcha, Panchkula.
In the said complaint it has been alleged that M/s Loop Telecom Pvt. Ltd. has obtained LOI for grant of UAS license in violation of clause 8 of UAS license guidelines. In pursuance to the LOI, DoT has already issued Unified Access Service License on 3rd March 2008. Clause 8 of UAS License guidelines and clause 1.4 (ii) of the UAS License granted to M/s Loop Telecom Pvt. Ltd., are verbatim and these are as stated hereunder: "No single company/legal person, either directly or through its associates, shall have substantial equity holding in more than one CBI Vs. Ravi Kant Ruia and others Page 207 of 526 Licensee Company in the same service area for the access services namely; Basic, Cellular and Unified Access Service. "Substantial equity" herein will mean equity of 10 per cent or more". A promoter company/legal person cannot have stakes in more than one Licensee Company for the same service area."
3. The allegations in the complaint appear to be that Essar Group holds entire equity in M/s Loop Telecom Pvt. Ltd., and also has a substantial stake in Vodafone Essar and the LOI and consequently UAS License have been issued in violation of the policy of DoT.
4. DoT on receipt of complaint made a reference to the Ministry of Corporate Affairs and the said Ministry offered their views at page 80/C which has also been incorporated in para 12 of pp 1617/N. The Ministry of Corporate Affairs, which is a nodal Ministry pertaining to the issues of companies, are of the view that Essar Group does not have any direct equity (or substantial equity) in M/s Loop Telecom Pvt. Ltd. Essar Group however holds 9.9 per cent indirectly in Loop Telecom. They have further stated that though Loop Telecom Pvt. Ltd. has received some indirect equity support from STPL through BPL Mobile Communications which is 9.9 per cent but this is not sufficient to demonstrate control through equity. It is also stated by the Ministry of Corporate Affairs that Essar Group has invested into unsecured, nonconvertible debentures of STPL to the extent of Rs.1592 crore and STPL has utilized these funds to invest in BPL Communications. However, STPL through BPL Communication also invested Rs.2421 crore in Essar Investment Limited against an investment of Rs.1592 crore. The Ministry of Corporate Affairs are of the view that STPL has operations/transactions which are substantially controlled or influenced by Essar Group and STPL CBI Vs. Ravi Kant Ruia and others Page 208 of 526 appears to have been a conduit for investment of these funds in BPL Communications. They are of a further view that though Essar Group is not an equity holder in STPL it has invested a huge amount in its nonconvertible debentures and that would show the funding of STPL by Essar Group, the equity has been provided to BPL Communication who is 40 per cent owner of Loop Telecom Pvt. Ltd. though not directly.
5. What is needed to be examined is whether the LOI and consequently the UAS License issued by DoT is in violation of their policy. The license condition is that no single company/legal person shall have substantial equity holding in more than one Licensee Company in the same service area. Substantial equity has been further defined as equity of 10 per cent or more. Subclause 1.4 of UAS License further states that the management control of the licensee company shall remain in Indian hands. Section 85 of the Companies Act, 1956 provides only for two kinds of shares which can be issued by a company. One is equity share capital or ordinary shares, and second is preference share capital. Subsection (2) of section 85 provides that "equity share capital" means with reference to any company or share capital which is not 'preference share capital'. Of course, compulsorily convertible debentures/instruments into shares can be regarded to belong to equity share capital. Hon'ble Supreme Court in Narendra Kumar Maheshwri v. Union of India, 1990 (Supp) SCC 440, at page 504 observed that any instrument which is compulsorily convertible into shares, is regarded as a "equity" and not as a loan or debt. Even the word "stake" used in Clause 8 of UAS License guidelines and clause 1.4
(ii) of the UAS License appears to pertain to "equity share capital" of licensee company(ies) that too in case of substantial equity.
CBI Vs. Ravi Kant Ruia and others Page 209 of 5266. So far the equity shareholding of M/s Loop Telecom Pvt. Ltd. is concerned the same has been indicated in para 3, 4 and 5 at page 15/N of the pre Note. During discussion with DDG (ASI) it was stated by him that the financial arrangements of investment of Essar Group in STPL and again by STPL through BPL communication in Essar Group took place prior to issue of LOI and grant of UAS Licence, and these investments as nonconvertible debentures may be termed as intercorporate investments and they cannot be considered to form direct or indirect equity share capital of any company under the Companies Act, 1956. Also these financial arrangements or managements by way of nonconvertible debentures were prior to issuance of LOI on 10.1.2008 and grant of UAS License on 3.3.2008. Ministry of Corporate Affairs have also observed that Essar Group has indirect equity, which cannot be said to be substantially reckonable, in Loop Telecom as the said equity is 9.9 per cent which is not sufficient to demonstrate control over the latter. Also, there is nothing on records which is indicative of the fact that Essar Group holds any substantial direct or indirect equity in M/s Loop Telecom Private Ltd. in violation of DoT policy for grant of UAS licence.
7. In view of the above, it appears that DoT have issued LoI and consequently granted licence after due satisfaction of the requirements for such grant. In such circumstances it may not be appropriate to serve the show cause notice as per DFA at p. 81/C."
290. It may be noted that Clause 8 deals only with substantial equity. Substantial equity has been defined as 10% or more. It prohibits holding of 10% or more equity by one licensee company in the another licensee company for the access services in the same service area.
CBI Vs. Ravi Kant Ruia and others Page 210 of 526It may also be noted that investment of money can be made through several instruments. These instruments include equity shares, preference shares, debentures, debt instruments etc. Thus, there is clear categorization of financial instruments through which investment can be made in a company. Clause 8 restricts itself to only one category of investment, that is, equity investment. Thus, LA (T) opined that investment of Essar Group in equity of STPL was not substantially reckonable and that investment in nonconvertible debentures may be termed as intercorporate investment. He also opined that investment in nonconvertible debentures cannot be considered to be direct or indirect investment in share capital of the company. This is a perfectly reasonable opinion.
It was also noted by him in his report that he arrived at this opinion in discussion with Sh. A. K. Srivastava.
291. PW 83 Dr. Santokh Singh in his examinationinchief itself dated 04.10.2013, pages 1 to 3, deposed about his opinion as under:
".......I have been shown DoT file D148, already Ex PW 70/A, wherein I have been shown a noting dated 05.05.2009 recorded by me. It bears my signature at point A, which I identify, and the note is already Ex PW 70/A25. This file was marked to me by DDG (ASI) Sh. A. K. Srivastava vide his note dated 29.04.2009, already Ex PW 70/A24 seeking my opinion regarding issue of show cause notice to Loop Telecom (P) Limited in respect of UAS Licences. On receiving the file, I went through the provisions of UAS licence and specially clause 1.4 (ii) of that licence as well as clause 8 of UASL Guidelines dated 14.12.2005. I called DDG (ASI) and he came to my CBI Vs. Ravi Kant Ruia and others Page 211 of 526 chamber accompanied by a Director (ASI) Sh. Gupta. I discussed the complaint of Janhit Morcha, Panchkula, with them. I also deliberated with them the views received from MCA. After considering the entire matter, I found the equity reported by MCA was only 9.9% of Essar group, but that equity was indirect and as per the equity condition, as mentioned in the guidelines, the violation would be only when the equity was 10% or more. I also discussed with them the nonconvertible debentures which were crossholding by one group into another group, that is, by Essar group into STPL. STPL, through BPL Communications Limited, also invested in Essar Investments Limited. Since this equity was not 10% or more, so I did not find any violation to the extent pertaining to clause 8 of UASL Guidelines and accordingly wrote my note. I had also considered the point as to whether the debentures could be counted towards the equity or not. Under the Companies Act it was clear that debenture holders shall have no voting right, but then I found a judgment of Hon'ble Supreme Court reported as Narendra Kumar Maheshwari Vs. Union of India, 1990 (Suppl) SCC 440, page 504, in which it was held that if the debentures were convertible, the same could be counted towards equity and not as a loan or debt. Since these were not convertible, the same were not to be counted as equity. Accordingly, I advised against issuance of show cause notice to the licencee company......."
Thus, he stood by his opinion that based on equity, there was no violation of Clause 8.
It is also interesting to take a look on his further examinationinchief dated 04.10.2013, pages 4 to 6, wherein prosecution tried to introduce extraneous elements of debt equity ratio, which reads as under:
CBI Vs. Ravi Kant Ruia and others Page 212 of 526"Ques : The MCA report was already before you as stated by you above. Did you consider the debt equity ratio as mentioned in the report while giving your opinion dated 05.05.2009?
Ans: As on the date I tendered my opinion, I did not understand the concept of debt equity ratio. Volunteered : When I was shown the view of Sh. Manish Sinha, DDG (LF), during investigation, only then I understood this concept.
(Objected to by Sh. S. V. Raju, learned Sr. Advocate, on the ground that this voluntary statement cannot come on record as this happened during investigation, which is countered by the learned PP on the ground that the witness has only expressed his feeling that he understood that concept at that time and have not said anything which had transpired between him and the IO). Court Order: Objection overruled.
Ques : You have stated that now you understand the concept of debt equity ratio, as mentioned in the report of MCA. Please tell this Court if your note dated 05.05.2009, already Ex PW 70/A25, regarding issuance of show cause notice is correct or not in the light of report of MCA?
Ans : My opinion as expressed in note Ex PW 70/A 25 dated 05.05.2009 is correct and stands that way even today.
Court Ques : You have stated that now you understand the concept of debt equity ratio. Doesn't your understanding of this concept make any difference in the case now?
Ans : My opinion is based only on the concept of equity holding and for that purpose this debt equity ratio was neither relevant at that time nor relevant now while considering clause 8.
Ques : Kindly take a look on your opinion Ex PW 70/A25. Why did you miss the word "associates" in this opinion?
Ans : The meaning and concept of this word was discussed in the department on many occasions, not CBI Vs. Ravi Kant Ruia and others Page 213 of 526 only relating to this case, but relating to other cases also. I even suggested to change this word and I suggested that this should be limited to the holding/ subsidiary companies and the department was, as such, acquainted with my views on this. Ques : When the word "associates" is still there in clause 8, then why are you missing considering the equity received through associates in reference to your opinion dated 05.05.2009 even today, more so, when you say that you understand the concept of debt equity ratio today?
Ans : There was no direct equity of Essar group in STPL/ Loop Telecom (P) Limited. Whatever equity was there, it was indirect and only to the extent of 9.9%. So, this equity was of associates only, I did not think fit to deliberate upon it in my note."
Thus, the prosecution has introduced the extraneous elements of debt equity ratio for interpretation of Clause 8. By no stretch of imagination such an element can be found in the language of Clause 8.
292. This witness was crossexamined by the learned Public Prosecutor. He was confronted with a portion of his statement under Section 161 CrPC, Ex PW 83/PA. He denied having made the same. The confronted portion reads as under:
"I could not gaze whether Essar Group is having substantial stake in Loop Telecom Limited through other means such as nonconvertible debentures."
Similarly, when confronted with the use of word "Associate", he denied having made the following statement:
"Here the word "Associate" is omitted inadvertently. I failed to see that Essar Group is having substantial control or influence over STPL."CBI Vs. Ravi Kant Ruia and others Page 214 of 526
Bare perusal of the crossexamination of the witness by learned Public Prosecutor would reveal that prosecution tried to introduce extraneous elements of debt equity ratio, substantial control or influence in the interpretation of Clause 8. The prosecution did not suggest parameters the breach of which would be considered violation of Clause 8.
His further crossexamination by learned Public Prosecutor, page 8, about the meaning of word "Stake" reads as under:
"Ques : I put it to you that the word "stake"
mentioned in clause 8 of UASL Guidelines is wrongly interpreted by you in your opinion Ex PW 70/A25? Ans : I analyzed the word "stake" correctly .
It is wrong to suggest that I am not telling the correct position before the Court in order to save the accused persons from legal punishment. It is wrong to suggest that the portions A to A, B to B and C to C of my aforesaid statement were correctly told by me to the IO.
Court Ques : You are a person with long standing legal background. Generally the word "stake" represents only equity capital. Do you agree with that?
Ans : Generally, stake here refers to substantial equity, but otherwise it may be of any kind like charge, debt, mortgage etc........"
In his crossexamination by the defence, page 10, he deposed about the word "Associate" as under:
"It is correct that, to my knowledge, the word "associate" has not been defined, either in UASL Guidelines clause 8, licence agreement, Indian Telegraph Act or in Companies Act 1956........"CBI Vs. Ravi Kant Ruia and others Page 215 of 526
Thus, the meaning and scope of clause 8 remained uncertain and undefined. There are no definite parameters of clause 8 and DoT never bothered to rectify the situation. In order to emphasize the vagueness of the Clause, defence referred to note dated 10.03.2006, Ex PW 78/DB, recorded by Sh. P. K. Mittal, DDG (VAS), relating to TataIdea dispute, in which "substantial equity clause" was alleged to have been violated and wherein the use of word "Associate" was also considered. However, when the matter reached the then Secretary (T) Sh. J. S. Sarma, he vide note dated 20.03.2006, Ex PW 78/DD, opined that the department must avoid the use of words like "promoters", "associate" etc., which were not properly defined. He also opined that if while dealing with substantial equity clause, the DoT talked of economic interest, then DoT should modify licence conditions. This is indicative of the difficulties faced by DoT in the compliance of Clause 8, which uses such vague words.
293. Thus, there is no material on record that DoT ever considered its own policy and procedure to find out violation of Clause 8 by the company. The opinion given by the Legal Adviser is correct one. The only element covered by Clause 8 is equity. When equity investment was within limits, there is no question of violation of Clause 8.
View of RBI
294. Not only this, RBI had also received a complaint from Telecom Watchdog regarding violation of Clause 8 and FDI CBI Vs. Ravi Kant Ruia and others Page 216 of 526 Policy by Essar Group. RBI examined it and found that there was no violation of FDI Policy by the company. However, as far as violation of telecom policy was concerned, it advised that DoT may be in a better position to take a view in the matter. This view was conveyed to the DoT by it vide letter dated 03.08.2009, page 3 (D148). However, there is no material on record that DoT bothered to examine its policy to take a view in the matter. There is absolutely no material on record that DoT ever took a view of its own policy and regulations including Clause 8. In view of this and the evidence led on record, it cannot be said as to what were the parameters of Clause 8 which were to be complied with by Loop Telecom Limited and how the company was in breach of the same.
Complaint of Sh. Ramesh Rathore MP and Examination by MCA
295. On receipt of another complaint, Ex PW 74/B2, relating to violation of Clause 8 by Essar group from Sh. Ramesh Rathore, Hon'ble MP, file D164, Ex PW 74/B, was opened by the DoT for dealing with the same. The opinion of Legal Advisor was sought on the complaint. However, Legal Advisor vide note dated 14.09.2010, Ex PW 74/B5, opined that no legal issue had been raised by the department. He also opined that it was for the administrative department to deal with it after obtaining the views of concerned quarters, that is, complaint was to be considered by the AS cell in consultation with LF branch.
296. However, vide letter dated 27.01.2011, Ex PW CBI Vs. Ravi Kant Ruia and others Page 217 of 526 74/B9, the DoT again referred the matter to MCA. Opinion of MCA was received vide letter 12.04.2011, Ex PW 74/B16 (27/c, D164), and it was taken on record by DoT vide note dated 10.05.2011, Ex PW 74/B17. Thereafter, DoT kept examining the issue by recording various notes till 07.07.2011 without coming to any final conclusion as to whether a show cause notice be issued to Loop Telecom Limited or not. Ultimately, on 09.07.2011, Secretary (T) recorded that legal opinion may be obtained before issuing show cause notice and the matter was again referred to LA (T). Thereafter, there is no movement in the file.
297. In the Ministry of Corporate Affairs, this complaint was examined by Sh. Henry Richard, Registrar of Companies, Maharashtra. He forwarded his report, Ex DW 5(A3)/X, to the Ministry of Corporate Affairs. In the Ministry, the issue was examined by Sh. M. R. Bhatt, Joint Director, and he prepared his report, Ex PW 74/B16, which was forwarded to DoT.
298. It is instructive to take a look on the report Ex PW 74/B16 given by Sh. M. R. Bhatt, Joint Director, ROC. The relevant part reads as under:
".........With reference to the subject matter cited above, I am directed to forward herewith a copy of the report of ROC, Mumbai vide letter cited at (3) above. It is observed from the said Report of ROC, Mumbai, that the allegations of the complainant have been forwarded to the Company for their comments and upon receipt of the clarification/ replies submitted by the concerned companies and upon verification of the same with reference to the documents filed by the said companies on the portal CBI Vs. Ravi Kant Ruia and others Page 218 of 526 of MCA, he had concluded that the Essar group, directly or indirectly, holds only 2.15% of Loop Telecom Pvt. Ltd., as on 3.9.07 i.e. the date on which the application was made to DOT for UAS Licence. The ROC also had at length examined as to the applicability of AS18 and AS23 to the allegation as to whether the Khaitan group became "associates" of Essar group for the purpose of UAS licence conditions, and had observed that the documents of the Companies examined do not substantiate "Associate" relationship between Essar Group and Khaitan Group. He further opined that the definition of "Associates" in AS 18 and 23 are for limited purpose of disclosure and consolidation of accounts respectively and cannot be applied to clause 8 of DOT Guidelines for the purpose of determining the meaning of "Associates" used therein as the same would have to be interpreted in the light of the policy at DOT's end. The Directorate agrees with the above conclusions/ views expressed by the ROC in the enclosed report.
(2) It is also observed from page No. 25 of ROC's report that Essar group have been a "net browser"
from the Khaitan group as at 31.3.2006 and even thereafter, including as on 3rd September 2007. In the light of the above facts, the contention of the complainant that Essar group through Essar Investments Ltd. (EIL) had given a huge loan of Rs. 1647 crores to STPL to acquire indirect and beneficial stake in Loop Telecom appears to be not tenable. This Directorate also concurs with the observations of the ROC, Mumbai that the investment in Nonconvertible debentures cannot be treated as and on par with equity participation......."
299. Thus, Sh. M. R. Bhatt did not find any relationship of "Associate" between Essar group and Loop Telecom Limited.
300. As already noted, the report was initially prepared CBI Vs. Ravi Kant Ruia and others Page 219 of 526 by Sh. Henry Richard, Registrar of Companies, Mumbai, which was forwarded by Sh. M. R. Bhatt to DoT. The report of Sh. Henry Richard is Ex DW 5 (A3)/X, relevant parts of which, pages 18 to 20, read as under:
"........As 18 & 23 interalia lay down following five criteria for determining "Associate" status of a company:
(a) Representation on the board of directors or corresponding governing body of invitee;
(b) Participation in policy making processes;
(c) Material transactions between the investor and the investee;
(d) Interchange of managerial personnel; or
(e) Provision of essential technical information.
Some of these criteria such as shareholding, board control through nominee director etc are verifiable based upon the records/ documents filed by these companies with ROC. Such documents do not substantiate "Associate" relationship between Essar group and LMIL/ LTL. However, the criteria such as material transactions between investors & investee companies, participation in policy making etc are not fully verifiable. Moreover the definition of "Associates" in AS 18 & 23 are for limited purpose of disclosure and consolidation of accounts respectively and cannot be applied to Clause 8 of DoT Guidelines for the purpose of determining the meaning of Associates used therein. Further the object and purpose of using the word Associates in the said DoT Guidelines would have to be interpreted in the light of policy at their end considering the fact that AS 18 & 23 excludes "subsidiary" and "Joint Venture" from the scope of definition of Associates. Therefore application of the definition of the Associate given in AS 18 & 23 for the purpose of Clause 8 of UASL Guidelines of DoT would not be appropriate. In the the light of the above this aspect may be concluded CBI Vs. Ravi Kant Ruia and others Page 220 of 526 at the end of DoT........."
301. Thus, Sh. Henry Richard also opined that there was no relationship of "Associate" between Essar group and Loop Telecom Limited. Sh. Henry Richard also opined that the definition of "Associate" as given in AS18 is for limited purpose of disclosure and consolidation of accounts and cannot be used for interpretation of Guidelines dated 14.12.2005 issued by DoT. This is a correct interpretation. In this regard, it is instructive to take note of the observations of Hon'ble Supreme Court in an authority reported as J.K. Industries Limited and another Vs. Union of India, (2007) 13 SCC 673, wherein meaning and purpose of Accounting Standards was explained in paragraphs 4 to 11, which read as under:
"4. In its origin, Accounting Standards is a policy statement or document framed by the Institute. Accounting Standards establishes rules relating to recognition, measurement and disclosures thereby ensuring that all enterprises that follow them are comparable and that their financial statements are true, fair and transparent . Accounting Standards ("AS", for short) are based on a number of accounting principles. They seek to arrive at true accounting income. One such principle is the matching principle. The other is fair value principle. The aim of the Institute is to go for paradigm shift from matching to fair value principle.
5. Today the revised Accounting Standards seek to arrive at true accounting income. In the age of globalisation the attempt is to reconcile the accounts of Indian companies with their joint venture partners abroad. The aim is to harmonise Indian Accounting Standards with International Accounting CBI Vs. Ravi Kant Ruia and others Page 221 of 526 Standards. With the object of bridging gap between IAS and IFRS, the Institute formulated new AS and introduced new concepts e.g. Deferred Tax Accounting (AS 22 impugned herein), Segment Reporting (AS 17), etc. However, as a matter of prudence and necessary adjustment, to arrive at real income, Accounting Standards require provision to be made for liabilities payable in future, provision to be made for contingencies, provision to be made for diminution, provision to reflect impairment and so on which have the effect of reducing incomes and were, therefore, not readily accepted by some enterprises and tax authorities.
6. The core of accountancy is bookkeeping. The rules of bookkeeping are clear. For example, the value of a fixed asset mentioned in a balance sheet is based on cost which may involve subjective estimation of the amount to be apportioned. Similarly, the quantum of depreciation is again an estimate, which can vary depending on the persons preparing the accounts as to when and at what stage he wants to record the depreciation. Accounting Standards are an attempt to overcome some of these deficiencies of accountancy. Accounting Standards involve codification of fundamental accounting rules, rules which explain and standardise the application of the fundamental rules to a variety of uncertain situations like retirement, contingencies, intangibles, consolidation, merger, etc.
7. Accounting Standards basically attempt to reduce the subjectivity and lay down rules so as to arrive at the best possible estimates. For example, net assets refer to the difference between total assets less liabilities but the value attributable to each asset and each liability is often subjective. It depends on estimates. This is where the Accounting Standards help. They reduce the subjectivity. Therefore, Accounting Standards help to arrive at the best CBI Vs. Ravi Kant Ruia and others Page 222 of 526 possible estimates. This estimation/ subjectivity is also on account of the conceptual difference between "accounting income" and "taxable income".
8. Accounting income is the real income. Tax laws lay down rules for valuation of inventories, fixed assets, depreciation, bad debts, etc. based on artificial rules and not on the basis of accounting estimates, which results in mismatch between accounting and taxable incomes. For example, a fixed rate of depreciation may, for some companies, result in computing lower than the actual income if the actual erosion in the value of the asset is lower than the depreciation calculated at the fixed rate and higher than actual income for others where assets erode faster. Accounting income is normally used as a relevant measure by most stakeholders. However, on account of artificial set of rules used in computation of taxable income one finds that accounting income differs from taxable income.
9. Looking to these problems, the evolution of Accounting Standards and their greater application is necessary as it results in reducing the need for tax laws to depend upon artificial rules. The object of Accounting Standards is, therefore, to standardise and to narrow down the options. The object behind the Accounting Standards is to evolve methods by which accounting income is determined, made more transparent and leave less and less room for subjective selection of methods and provide for more attention to the quality of estimates used in arriving at accounting income.
10. The main object sought to be achieved by Accounting Standards which is now made mandatory is to see that accounting income is adopted as taxable income and not merely as the basis from which taxable income is to be computed. Thus, if the rules by which inventories are to be CBI Vs. Ravi Kant Ruia and others Page 223 of 526 valued are laid down in the Accounting Standards and are followed in the determination of accounting income, then tax laws do not need to lay down the rules and the tax authorities do not need to examine the computation of the value of inventories and its effect on computation of income. Similarly, if there is an accounting standard on depreciation which requires estimation of the useful life and prescribes the appropriate method for apportionment of cost of fixed assets over their useful life, it is unnecessary for tax laws to apply an artificial rule to decide the extent of allowance for depreciation.
11. Finally, the adoption of Accounting Standards and of accounting income as "taxable income" would avoid distortion of accounting income which is real income."
302. Thus, the object of Accounting Standards is to ensure preparation of accounts of the companies by prescribed standards and not to help in interpretation of Guidelines framed under Section 4 of Indian Telegraph Act by the DoT. In an authority reported as M/s MSCO Pvt. Ltd. Vs. Union of India and Others, (1985) 1 SCC 51, Hon'ble Supreme Court observed in paragraph 4 as under:
"It is hazardous to interpret a word in accordance with its definition in another statute or statutory instruments and more so when such statute or statutory instrument is not dealing with cognate subject."
303. The prosecution did not examine any witness about this opinion of MCA. However, Sh. M. R. Bhatt, the then Joint Director, ROC, who had given the report, Ex PW 74/B16, was CBI Vs. Ravi Kant Ruia and others Page 224 of 526 examined by the defence as DW 5. The relevant part of his deposition reads as under:
"........I have been shown my letter dated 12.04.2011, already Ex PW 74/B16 (D164, at pages 9 & 10) addressed by me to Sh. Dhanraj, Director, Inspection and Investigations. This letter was written by me in reference to a complaint of Mr. Ramesh Rathore, the then Hon'ble M.P., a copy of which was forwarded to me by my headquarter for inquiry and report. This complaint was against Essar group alleging that they were using Loop Telecom Limited as a front to acquire one more telecom licence in addition to another licence which they were already having. A copy of that complaint is already Ex PW 74/B2 (page 126). On receipt of the copy of the complaint, I referred it to ROC, Mumbai, which was having jurisdiction over companies of Essar group, for a report. ROC, Mumbai sent me a report, which is annexed to my aforesaid letter as an annexure (pages 11 to 69), now Ex DW 5 (A3)/X. I examined this report with reference to the complaint and the documents filed on the MCA portal the references of which were made in the ROC's report. Upon my examination, I found the ROC's report to be factually correct. As per this report, there was no tenability of the complaint of Mr. Ramesh Rathore, in the light of the provisions of the Companies Act. I have been shown a copy of another letter dated 23.06.2011 written by me to Sh. Dhanraj, Director, Inspection and Investigations, Ministry of Corporate Affairs, New Delhi. The copy is correct and now Ex DW 5(A3)/Y. This letter was written by me in reference to a different complaint of Telecom Watchdog, after obtaining a report from ROC, Mumbai forwarded to me through letter dated 31.05.2011, collectively Ex DW 5(A3)/Z, running into 21 pages. Again, the complaint was found to be factually incorrect by ROC, Mumbai and I agreed with it. The complaint of Telecom Watchdog is CBI Vs. Ravi Kant Ruia and others Page 225 of 526 already Ex PW 70/A4.
I was not called by CBI at any time........."
304. Thus, he found the complaint to be factually incorrect. This witness was crossexamined by the prosecution. The relevant part of his crossexamination reads as under:
".......Ques: Did you examine the inter se relationship between Loop Telecom Pvt. Limited, BPL Communications Limited, BPL Mobile Communication Limited and STPL?
Ans: I had examined the inter se relationship between these four entities only in the light of documents attached with the ROC report. Ques: Did you examine the movement of funds from Essar group to STPL and from STPL to other entities?
Ans: I had examined this aspect also from the relative balance sheets of concerned companies.
It is correct that it was in my knowledge from the balance sheets that Essar group had invested Rs. 1592 Crores in NCDs of STPL. It is also correct that it was in my knowledge that the paid up capital of STPL was Rs. 1 lac only. Going by this, STPL was having a small capital. I do recall that certain sum of money was invested by STPL in BPL Communications Limited, but I cannot tell how much funds were invested unless the balance sheet is shown to me, as I had seen the balance sheets only in this regard. Volunteered: the complaint was in relation to the crucial date of 03.09.2007. From my examination, I found that prior to this date, that is, as on 31.03.2006, Khaitan groups company invested Rs. 2421 Crore in Essar Investments Limited. However, in the subsequent year, that is, year ended 31.03.2007, STPL had issued NCDs to Essar group companies and raised about Rs.1590 Crore. This shows that the investment of Khaitan group in Essar group is more than the investment of Essar group in Khaitan group. In view of this, the CBI Vs. Ravi Kant Ruia and others Page 226 of 526 allegation that Essar group funded Khaitan group appears to be incorrect as alleged in the complaint. Court Question: Did you ascertain the nature of these fund transfers?
Ans: No. I only looked at the figures as they appear in the balance sheets as the same are public documents.
Ques: I put it to you that the money invested by STPL in Essar group was in fact money of Essar group?
Ans: It is incorrect. I cannot say as I went by whatever appeared in the balance sheets.
I have explained the meaning of word "Associate" in my report. It is wrong to suggest that my reports are not based on actual facts and figures. It is further wrong to suggest that for these reasons, my reports are incorrect. It is further wrong to suggest that my reports are based on incomplete facts........"
The view of Sh. M. R. Bhatt is reasonable one as Essar group had subscribed only to nonconvertible debentures of STPL worth Rs. 1592 crore, and issue of nonconvertible debentures is not covered by clause 8. The clause deals only with substantial equity and not with debt instruments.
305. On perusal of the record, I also find that prosecution is relying upon report of Sh. M. R. Bhatt, Ex PW 74/B16, to which report of Sh. Henry Richard, Ex DW 5(A3)/X is also annexed. However, the prosecution got the report proved through PW 74 Sh. Madan Chaurasia, the then Section Officer, DoT and not through the officers who prepared the reports. When the prosecution is relying upon these reports, it ought to have examined either Sh. M. R. Bhatt or Sh. Henry Richard as its witness. The prosecution ignored this direct route and got CBI Vs. Ravi Kant Ruia and others Page 227 of 526 the reports proved through another officer, that is, Sh. Madan Chaurasia. The officer who prepared the report could have been subjected to crossexamination under oath as to the correctness of the report, which has not happened in the instant case. This itself shows lack of confidence by the prosecution in its case. However, on perusal of testimony of Sh. M. R. Bhatt and report given by Sh. Henry Richard, I find their views are reasonable to the effect that Loop Telecom Limited was not an "Associate" of Essar group. This is the reason that these witnesses were not examined by the prosecution. Thus, these reports are of no avail to the prosecution.
Violation of Clause 8 by the Device of Partnership Firm
306. It is the case of the prosecution that clause 8 was also violated by the Essar group by means of a partnership firm, in which two companies of Essar group were partners. It is the case of the prosecution that a partnership firm BPL Communication was constituted in which two companies from Essar group, that is, Essar Investment Limited and Karthik Financial Services Limited were partners, to the extent of 3% and 2% respectively. It is the case of the prosecution that BPL Communications Limited was partner to the extent of 95%. However, there was no agreement between the partners as to how the business of the firm shall be conducted. It is the case of the prosecution that in such a situation as per Section 12 of Partnership Act decisions were to be taken by majority of partners. It is the case of the prosecution that majority belonged CBI Vs. Ravi Kant Ruia and others Page 228 of 526 to Essar group, that is, Essar Investment Limited and Karthik Financial Services Limited. It is the case of the prosecution that in this way, BPL Communications Limited was controlled by Essar group through the device of partnership, leading to violation of clause 8.
307. On the other hand, defence argued that the partnership firm was constituted only for saving tax and nothing else. It is the case of the defence that there is absolutely no evidence on record that the partnership firm was constituted to control BPL Communications Limited.
308. Let me take note of the evidence on record.
309. In his examinationinchief dated 23.01.2013, page 5, PW 40 Amit Kumar Gupta deposed about admission of ETHL into partnership. His deposition reads as under:
"........I have been shown deed of admission dated 04.02.2006 entered into between Essar Teleholdings Limited, Karthik Financial Services Limited, BPL Communications Limited and Essar Investments Limited. It bears the signature of Vikash Saraf at point A on behalf of Essar Teleholdings Limited. The deed of admission is now Ex PW 40/E (D52)......."
310. PW 42 Sh. V. Ganesan, Deputy General Manager, Essar Global Services Limited, deposed about the partnership firm in his examinationinchief dated 29.01.2013, pages 8 and 9, as under:
"........I have been shown a deed of admission dated 04.02.2006 signed between ETHL and Karthik Financial Services Limited and also between BPL Communications Limited and Essar Investments Limited. This deed has been signed by Sh. Vikash CBI Vs. Ravi Kant Ruia and others Page 229 of 526 Saraf at point A for ETHL, Sh. P. Ratanraj at point B for BPL Communications Limited and Sh. N. B. Vyas at point C for Essar Investments Limited. Sh. Girish Sathe signed as a witness at point D. The deed is already Ex PW 40/E (D52).
I have also been shown a deed of retirement dated 20.09.2006 executed between the aforesaid four companies, D53. This has been signed by Sh. N. B. Vyas for ETHL at point A, Sh. Girish Sathe for Karthik Financial Services Limited at point B, Sh. P. Ratanraj for BPL Communications Limited at point C and Sh. R. Vijay for Essar Investments Limited at point D. I also signed this deed as a witness at point E. The deed is now Ex PW 42/D. I have also been shown deed of amendment dated 01.04.2007 signed between Karthik Financial Services Limited, BPL Communications Limited and Essar Investments Limited. Sh. Girish Sathe signed at point A on behalf of Karthik Financial Services Limited, Sh. P. Ratanraj signed at point B on behalf of BPL Communications Limited and Sh. R. Vijay signed at point C on behalf of Essar Investments Limited. I signed this as a witness at point D. The said deed is now Ex PW 42/E (D54)..........."
311. PW 43 Sh. Narottam B. Vyas, Director in ETHL, deposed about reconstitution of firm in his examinationinchief dated 31.01.2013, pages 8 and 9, as under:
".........There was a partnership firm by the name of Essar Teleholdings. Initially Essar Teleholdings Limited and Karthik Financial Services Limited were its partners. I have been shown minutes of board meeting held on 02.01.2006, Ex PW 43/A17, which was attended by me and chaired by Vikash Saraf. In this meeting, it was proposed and resolved that this firm be reconstituted by admission of BPL Communications and Essar Investments Limited as partners, in addition to the existing partners and it CBI Vs. Ravi Kant Ruia and others Page 230 of 526 was also approved to change the name of the firm from M/s Essar Teleholdings to M/s BPL Communications. It was also resolved that company should contribute to the capital of the partnership by sale of 86,05,304 equity shares held in BPL Mobile Communications Limited at a total consideration equal to cost in the books. It was also resolved that company do sell 24,21,00,000 MOCD of Rs. 100 each in Essar Investments Limited to BPL Communications Limited at Rs. 100 per MOCD. The minutes have been signed by Sh. Vikash Saraf.
I have been shown minutes of board meeting held on 14.01.2006, Ex PW 43/A18, which was attended by me and chaired by Sh. Vikash Saraf. In this meeting, it was proposed and resolved that in respect of this partnership firm, that is, BPL Communications (formerly Essar Teleholdings), the profit and loss sharing ratio shall be: BPL Communications Limited 90%, Essar Teleholdings Limited 5%, Essar Investments Limited 3% and Karthik Financial Services Limited 2%. A draft deed of admission was also discussed and approved by the board. These minutes have also been signed by Sh. Vikash Saraf.
I have also been shown minutes of board meeting held on 20.09.2006, Ex PW 43/A25, wherein I was also present and the meeting was chaired by Sh. Vikash Saraf. In this meeting, it was proposed and resolved that the company, that is, ETHL, should resign as partner from partnership firm M/s BPL Communications. The deed of retirement was also discussed and approved by the board. These minutes have also been signed by Sh. Vikash Saraf........"
312. PW 51 Sh. S. V. Venkatesan, Director, ETHL in his examinationinchief dated 12.04.2013, pages 4 to 7, deposed about constitution of partnership firm BPL Communication, CBI Vs. Ravi Kant Ruia and others Page 231 of 526 formerly M/s Essar Teleholdings, as under:
".......As per board minute dated 16.01.2006, already Ex PW51/A5, it was resolved to form a partnership firm by the name BPL Communications together with BPL Communications Limited, ETHL and Karthik Financial Services Limited as its partners.
As per board minute dated 28.04.2006, already Ex PW51/A7, it was resolved to change the existing denomination of Rs.100/ per debenture into 1000. In the meeting, the investment in NCDs of STPL was also considered and adjourned.
As per board minute dated 13.09.2006, already Ex PW51/A10, it was resolved to reconstitute the partnership firm M/s BPL Communications with EIL, BPL Communications Limited and Karthik Financial Services Limited, by retiring ETHL. It was also resolved to purchase 4 crore NCDs of Rs.100 each of STPL from ETHL in one or more tranches.
As per board minute dated 02.03.2007, Ex PW 51/A13, it was resolved to change the sharing of profit and loss of the firm M/s BPL Communications in the ratio of 95% with BPL Communications Limited, 3% with EIL and 2% with Karthik Financial Services Limited.
As per board minutes dated 10.10.2007, Ex PW51/A17, it was resolved to purchase 2310630 fully convertible debentures of Rs.100 each of Kroner Investments Limited from BPL Communications Limited at a mutually agreed price. It was also resolved to sell 2310630 fully convertible debentures of Rs.100 each held by the company in Reclame Commercial and Securities Private Limited to BPL Communications Limited on a mutually agreed price. It was also resolved to place an ICD for an amount of Rs.852 crore with Loop Telecom Private Limited at an interest rate of 12.75% per annum for a period of 30 days on mutually agreed terms and conditions. It was also resolved to sell 410018 equity shares of 100 each of CBI Vs. Ravi Kant Ruia and others Page 232 of 526 Santa Securities Private Limited to BPL Communications Limited on mutually agreed terms and conditions and also to sell 322955 FCD of 100 each of Santa Securities Private Limited to BPL Communications Limited on mutually agreed terms and conditions.
As per board minutes dated 03.12.2007, Ex PW 51/A18, it was resolved to pledge 74% shares held in BPL Mobile Communications Limited in favour of the lenders mentioned in the resolution no.14 for an amount of Rs.850 crore.
As per board minutes dated 11.02.2008, Ex PW 51/A20, it was resolved to purchase 16008685 OCD of Rs.100 each of Essar Holdings Limited from Loop Mobile Holdings India Limited on agreed terms.
As per board minutes dated 16.06.2008, Ex PW51/A22, it was resolved to invest upto Rs.150 crore in NCDs of STPL on agreed terms.
As per board minutes dated 10.11.2008, Ex PW51/A26, it was resolved to open a current account in the name of EIL with SBI, Manit Branch, Bhopal. It was also resolved to open a bank account at State Bank of Mysore, Nariman Point Branch, Mumbai in the name of partnership firm M/s BPL Communications in which EIL was a partner. It was also resolved to purchase 50 lakh NCDs of 100 each of STPL from Millennium Growth and Development Fund at an agreed price. It was also resolved to purchase 50 lakh NCDs of Rs.100 each of STPL from Oblique Trading Private Limited at an agreed price.
As per board minutes dated 02.01.2009, Ex PW 51/A27, it was resolved to reconstitute the partnership firm M/s BPL Communications with EIL, BPL Communications Limited, Karthik Financial Services Limited, Mr. R. Sathisan, Mr. V. Ganesan, Mr. S. Shankaranarayanan and Mr. R. Vijay. This was done with a view to convert the partnership firm into a company which requires at least seven members. It was also resolved to purchase CBI Vs. Ravi Kant Ruia and others Page 233 of 526 11856730 fully convertible debentures of 100 each of SSPL from BPL Communications (formally M/s Essar Teleholdings), a partnership firm, at an agreed price........"
Thus, Sh S. V. Venkatesan deposed as to how the partnership firm was constituted and reconstituted. He did not say anything as to why the partnership firm was constituted. However, Sh. S. V. Venkatesan in his further examinationin chief, page 8, deposed that his role as an independent director was to ensure that the proposal placed before the board complied with the laws. His deposition reads as under:
"........My role in board meetings as an independent director was to ensure that the proposal placed before the board makes business sense and fully complies with the laws of the land and if any, resources were required for the proposal, adequate arrangements therefor were made........."
Sh. S. V. Venkatesan also deposed that all the minutes have been correctly recorded and proved the minutes book of Essar Investment Limited, Ex PW 43/DC (D26). He also proved the minutes dated 02.03.2007, Ex PW 51/A13, where profit sharing ratio was fixed. Even PW 43 Sh. Narottam B. Vyas deposed that minutes book of Essar Investment Limited, Ex PW 43/DC (D26) is correct. Minutes books of companies are otherwise also deemed to be correct as per the Companies Act.
313. PW 58 Sh. Girish K. Sathe in his crossexamination dated 05.06.2013, pages 3 to 5, deposed about constitution of partnership firm as under:
CBI Vs. Ravi Kant Ruia and others Page 234 of 526"........It is correct that when ETHL decided to sell its 9.99% shareholding in BPL Mobile Communications Limited to HEL, I was company secretary of ETHL, and as company secretary, I sent the proposed transaction to inhouse tax department. It is correct that at that time minimum alternate tax (MAT) was payable only by companies and not by firms. It is correct that if ETHL had sold its 9.99% stake in BPL Mobile Communications Limited directly to HEL, it would have been liable to pay heavy taxes by way of MAT. It is correct that in order to save this tax, our inhouse tax department, suggested formation of a partnership firm and assignment of the aforesaid shares to it. It is correct that legal opinion was also obtained in this regard of Sh. Vipul Modi. However, after obtaining legal opinion it was felt that instead of forming a new partnership firm, an existing partnership firm of the group, lying dormant, may be used for this purpose. It is correct that at that time there was a partnership firm by the name of Essar Teleholdings, comprised of two partners, namely, ETHL and Karthik Financial Services Limited, and it was decided to use this firm. It is wrong to suggest that this decision was informed by me to Sh. I. P. Khaitan. However, the inhouse taxation department informed him in this regard. It is correct that if BPL Communications Limited had sold its shares in BPL Mobile Communication Limited to HEL, it would also have incurred huge taxation liability by way of MAT. It is correct that for this reason Sh. I. P. Khaitan also agreed that BPL Communications Limited would also join the partnership firm and assign its shares to it.
It is correct that Karthik Financial Services Limited was a 90% partner in Essar Teleholdings, the partnership firm. It is correct that this partnership firm was reconstituted with new name BPL Communications, with new partners BPL Communications Limited having 90% share, Essar Investments Limited having 3% share, Karthik CBI Vs. Ravi Kant Ruia and others Page 235 of 526 Financial Services Limited having 2% share and ETHL having 5% share.
Karthik Financial Services Limited was made a 2% partner as it was an existing partner. Essar Investments was made partner in the firm as it was to provide administrative support and also to make certain investments in the firm. It is correct that BPL Communications Limited and ETHL were responsible for management of the firm. It is correct that ETHL left this partnership firm in September October 2006, that is, after BPL Communications Limited decided to terminate the agreement of sale of BMCL with HEL. ETHL left the partnership as it no longer wanted to continue with the investment in the partnership firm for the reason of the termination of aforesaid agreement by BPL Communications Limited. It is correct that after ETHL left, the firm was being managed by BPL Communications Limited alone.
It is correct that partnership deed was never registered as the only aim of the firm was tax planning and the partnership firm was short tenured. It is correct that even after the formation of partnership firm, the equity of BPL Mobile Communication Limited to the extent of 9.99% continued in the name of ETHL and whatever shares were held by BPL Communications Limited continued in its name. It is correct that ETHL voted as per its shares in the shareholders meeting of BPL Mobile Communication Limited........"
314. Thus, all the witnesses deposed only about constitution of partnership firm. From the constitution of firm itself, it cannot be inferred that partnership firm was meant to control BPL Communications Limited. However, Sh. Girish Sathe deposed that the partnership firm was constituted to save tax.
315. On the contrary, defence examined DW 8 Sh. Vipul CBI Vs. Ravi Kant Ruia and others Page 236 of 526 Modi, a practicing a chartered accountant. He deposed that he had advised ETHL that in order to save tax, the shares of BPL Mobile Communication Limited be sold through a partnership firm. His examinationinchief dated 25.08.2014, pages 1 and 2, reads as under:
"As a practicing chartered accountant, my job relates to corporate advisory and tax advisory. I am practicing chartered accountant since 1986. In 2006, Essar Teleholdings Limited sought my opinion regarding tax implications of a proposed transaction involving sale of shares of BPL Mobile Communications Limited held by Essar Teleholdings Limited. I considered the matter and gave my written opinion dated 16.01.2006, a selfcertified copy of which I am carrying. The same is a correct copy of the opinion which was given by me. It bears my signatures at point A on each page. The opinion is now Ex DW 6 (A8)/X. This opinion advises as to how Income Tax, particularly MAT (Minimum Alternate Tax), can be minimized. Sh. Azad Jain, an official of InHouse Tax Department of Essar group, came to my office and requested me to opine as to how the tax can be minimized on the proposed sale transaction of the aforesaid shares. The sale was to be made to Hutchison Essar Limited. When I examined the matter I found that direct sale of shares would attract MAT, therefore, we evolved a structure, whereby this sale would be through a partnership firm, which does not attract MAT. I suggested that the shares held by Essar Teleholdings Limited should be transferred or contributed as capital to an existing partnership firm. Thereafter, if the shares were sold by the partnership firm, no MAT would be attracted and there would be saving of tax. However, I do not know if my advice was followed by Essar Teleholdings Limited or not. I did not consider the transaction from any other angle except the tax angle. As per the documents CBI Vs. Ravi Kant Ruia and others Page 237 of 526 examined by me while giving my opinion, I came to know that Essar Teleholdings Limited belongs to Essar group and BPL Communications Limited belongs to Mr. I.P. Khaitan........."
The relevant part of his crossexamination reads as under:
"........As per my advice, Essar Teleholdings Limited, which was holding the shares, was to enter / join a partnership firm. However, I advised that both Essar Teleholdings Limited and BPL Communications Limited should enter a partnership firm. I do not know if any partnership firm was constituted or not. I advised them that it was more advantageous if they join an existing partnership firm.
Court Questions: What difference would it make if instead of joining an existing partnership firm, a new partnership firm is constituted?
Ans: In an existing partnership firm, there would be no objection from the tax authorities that the firm has been constituted solely for the purpose of minimizing tax.
It is not mandatory that if the tax authorities come to know that the sole purpose of constituting the partnership firm is to minimize tax that they would refuse the benefit of tax. It is always better to join an existing partnership firm. It was not in my knowledge that Essar Teleholdings Limited was already a partner in an existing firm. It is correct that the name of Mr. I.P. Khaitan does not figure anywhere in my opinion. It is also correct that I have not mentioned in my opinion that Essar Teleholdings Limited belongs to Essar group and BPL Communications Limited belongs to Mr. I.P. Khaitan group. Volunteered: I know it personally as Essar Teleholdings Limited was my client and after giving my opinion, Mr. I.P. Khaitan had once telephoned me and in that discussion, I came to know that BPL Communications Limited belongs to him .CBI Vs. Ravi Kant Ruia and others Page 238 of 526
While examining the documents submitted to me by Essar Teleholdings Limited, I had come to know that BPL Communications Limited belongs to Mr. I.P. Khaitan, though its final confirmation came when Mr. I.P. Khaitan himself spoke to me. I had seen the balance sheets of BPL Communications Limited and its shareholding pattern. The name of BPL Communications Limited figured in my discussion with Mr. Azad Jain as the sale of shares was being done by both, that is, Essar Teleholdings Limited and BPL Communications Limited .
Ques: As per your statement, only Essar Teleholdings Limited had contacted you for seeking opinion as to how to minimize their tax on the sale of aforesaid shares. What made you to give an opinion about BPL Communications Limited also without being asked for the same?
Ans: My opinion was given to Essar Teleholdings Limited only. However, the structure evolved of the proposed partnership covered BPL Communications Limited also. The documents placed before me by Essar Teleholdings Limited showed that the sale of shares was to be done by both Essar Teleholdings Limited as well as BPL Communications Limited and that is the reason its name also figured in the proposed structure of partnership.
It is correct that, in my opinion, Essar Teleholdings Limited by itself could also have saved / minimized tax on the proposed sale of shares. In that situation, BPL Communications Limited would have dealt with the sale of shares on its own. In case it would have sold its shares by itself, it would have incurred tax liability but if it had also joined a partnership firm, it would also be able to save tax. The words "Transfer" and "Contribution"
are used simultaneously as contribution also involves transfer of shares, that is, transfer in the name of firm. Again said, transfer as property of the firm as shares cannot be held by a partnership firm but can only be held by individual partners in their name.
CBI Vs. Ravi Kant Ruia and others Page 239 of 526Any profit on sale of such shares, would be profit of the firm. Such profit shall also not be taxable even in the hands of individual partner as the same is exempted from tax. It is wrong to suggest that I am introducing the fact that BPL Communications Limited belongs to Mr. I.P. Khaitan group for the first time........"
Thus, Sh. Vipul Modi deposed that he advised constitution of a partnership firm for tax saving purposes.
It is the case of the defence that the partnership was created under Income Tax Act as a tax saving device, which is not illegal. The plea of the defence appears to be acceptable as in an authority reported as Ganga Metal Refinery Company Private Limited Vs. Commissioner of Income Tax, AIR 1997 Cal. 429, partnership under Income Tax Act was held to be a separate concept from partnership under Partnership Act. It is instructive to extract paragraphs 22 and 24, which read as under:
"22. The entity known as partnership under the Incometax Act is not the same entity of partnership strictly within the limits of the Indian Partnership Act.
24. It is therefore essential always to keep clear in the mind that the IncomeTax entity of partnership under the IncomeTax Act is a concept in Incometax law separate from the concept of partnership under the Partnership Act. IncomeTax entity of partnership under the Income Tax Act may not satisfy the legal requirements of a partnership within the strict meaning of the Partnership Act."
Thus, there is no evidence on record that the CBI Vs. Ravi Kant Ruia and others Page 240 of 526 partnership firm was constituted to violate Clause 8. Rather the evidence is otherwise. Thus, prosecution failed to prove the allegations that partnership firm was constituted to control Loop Telecom Limited in violation of Clause 8.
Violation of Clause 8 by Extension of Credit Facilities and Guarantee by Essar Group Payment of Entry Fee
316. It is the case of the prosecution that Rs.700 Crore for deposit of entry fee was provided to Loop Telecom Limited by Essar Telecom Infrastructure Pvt. Limited (ETIPL), a company of Essar Group. It is also the case of the prosecution that Loop Telecom Limited had also availed a term loan of Rs.725 Crore for payment of entry fee, along with nonfund based bank guarantee of Rs.812 Crore from SBI. It is the case of the prosecution that this loan was guaranteed by Essar Power Limited and Essar Steel Limited. It is the case of the prosecution that the bank officials processed the loan as loan to Essar Group.
317. On the other hand, defence argued that Rs.700 Crore was paid by ETIPL to Loop Telecom Limited for securing lease of its tower facilities/ passive infrastructure. It is the case of the defence that it was a bona fide deal, as sharing of infrastructure is permitted under the guidelines. It is also the case of the defence that the loan was granted by SBI to Loop Telecom Limited in a fair manner taking it to be independent telecom operator. It is also the case of the defence that merely CBI Vs. Ravi Kant Ruia and others Page 241 of 526 because Essar companies stood guarantee for the loan did not make Loop Telecom Limited an Essar company.
318. Let me take note of evidence about Rs. 700 crore given by ETIPL to Loop Telecom Limited.
PW 10 Sh. Dharmadeep Mankar, Manager, SBI, Mumbai, deposed that ETIPL is having a bank account in Bholabhai Desai Road branch of the bank. He deposed that vide request of transfer of fund dated 10.01.2008, Ex PW 10/B14, ETIPL had transferred an amount of Rs.392.50 Crore to Loop Telecom Limited. He also deposed that vide request for transfer of fund dated 11.01.2008, Ex PW 10/B13, ETIPL had transferred an amount of Rs.307.50 Crore to Loop Telecom Limited.
319. PW 42 Sh. V. Ganesan, Dy. General Manager, Essar Global Services Limited, deposed about the resolution for signing of Memorandum between LTL and ETIPL in his examinationinchief dated 29.01.2013, pages 7 and 8, as under:
".......I have been shown board minutes of Loop Telecom (P) Limited, already Ex PW 34/D12. In this meeting, a resolution was passed authorizing signing of an MOU between this company and Essar Telecom Infrastructure (P) Limited. This MOU was basically for raising some advances for telecom business and for raising passive infrastructure. This MOU was of commercial nature. I was authorized to sign this MOU by this resolution and accordingly, I signed the MOU. I have been shown a certified true copy of that memorandum, which has been signed by me at point A on behalf of Loop Telecom (P) Limited and at point B by Sh. S. Subramaniam on CBI Vs. Ravi Kant Ruia and others Page 242 of 526 behalf of BPL Communications Limited. It has also been signed on behalf of Essar Telecom Infrastructure (P) Limited, but I am unable to identify the signatures of the signatory of this company. The memorandum is now Ex PW 42/C (D72), pages 1 to 45. Each page of this memorandum has also been initialed by the three signatories. This MOU was drafted by Sh. Ajay Madan. Through this MOU, Loop Telecom (P) Limited obtained advance of Rs. 700 crore from Essar Telecom Infrastructure (P) Limited. This transaction was of commercial nature and was handled by Sh. Ajay Madan, so I do not know why this advance was taken. The proposal for obtaining passive infrastructure of ETIPL did not materialize and accordingly, this advance was returned......."
Thus, the witness deposed that the transaction was of commercial nature.
320. PW 56 Lt. Col. Ajay Madan also deposed about Memorandum of Understanding executed between ETIPL and Loop Telecom Limited (LTL) by which Rs.700 Crore were paid by ETIPL to LTL. His examinationinchief dated 22.04.2013, pages 15 to 17, reads as under:
".......I have been shown Memorandum of Undertaking entered into between ETIPL, Loop Telecom Private Limited and BPL Mobile Communications Limited, D72, already Ex PW42/C. It is a genuine document.
Question: Would you please tell this Court as to why this MOU was signed?
Answer: This MOU was signed to give an order of construction of about 20,000 towers to ETIPL by Loop Telecom Private Limited and BPL Mobile Communications Limited. This was a major order for ETIPL and was to be very good for it. At that time, I CBI Vs. Ravi Kant Ruia and others Page 243 of 526 was CEO of ETIPL. The drafting was done by legal and financial teams. I had seen the draft and approved it. The terms and conditions were same as were prevailing in the market.
It was a leasing agreement and ETIPL to get monthly payment for leasing out its tower infrastructure, about Rs.35,000/ per tower.
No advance was received by ETIPL in this regard. However, ETIPL paid about Rs.700 crore to Loop Telecom. Again said, ETIPL gave a loan of this amount to Loop Telecom. It was a short term loan. This amount of Rs.700 crore was received by ETIPL from Essar group companies.
Question: What made Essar group to give the aforesaid amount of Rs.700 crore to Loop Telecom Limited, whereas it had to receive monthly rent, being service provider?
Answer: This was a business decision to secure a large business and there was no risk in it as the money was being given only as a short term loan. Question: Did ETIPL enter such like agreement with any other company before this agreement? Answer: No. Question: Who took this decision on behalf of ETIPL?
Answer: This was conveyed us by Sh. Vikash Saraf. Question: Who took this decision on behalf of Essar group?
Answer: Sh. Vikash Saraf.
Question: Was the aforesaid MOU ever made operational?
Answer: Only a part of the MOU was made operational involving the financial transactions, as Loop Telecom failed to obtain the necessary spectrum in time and commence the network roll out services. The money was returned to ETIPL by Loop Telecom Limited.
I was never an employee of Loop group. I never obtained any salary or remuneration from Loop group.CBI Vs. Ravi Kant Ruia and others Page 244 of 526
MOU already Ex PW 42/C
bears signature of
Sh. S. Subramaniam at point B and that of Sh. Anup Khatri, Legal Head, ETIPL at point C. I do not recognize third signature at point A. I have heard the name of Sh. Girish Sathe and Sh. V. Ganesan. They were part of the Essar group and working like Company Secretaries but I do not know the company for which they were working. The office of ETIPL was situated at Techno Park, Mumbai and I used to sit in that office. The board meetings of BPL Communications Limited used to take place at BPL Communication's office situated at Mahim, Mumbai and I used to attend the meetings there. The meetings of the board of Loop Telecom Private Limited used to take place at two or three different places. Sometimes at Techno Park and sometimes at Essar House and once in a while at BPL Communication's office. The board meetings of Loop Telecom Private Limited used to be very informal affair. Many a times, they used to be held at Sh. Vikash Saraf's office.
Question: Would you please tell this Court as to who Sh. Vikash Saraf used to report to? Answer: I do not know one person to whom he used to report to but he used to interact with all the promoters of Essar group. Sh. Shashi Ruia, Sh. Ravi Ruia and Sh. Prashant Ruia etc. are promoters of Essar group."
Thus, PW 56 Lt. Col. Ajay Madan also justified the agreement of sharing towers with Loop Telecom Limited. In his crossexamination dated 23.04.2013, page 3, he reaffirmed the same as under:
".......It is correct that as per agreement, already Ex PW42/C (D72), which is an agreement between ETIPL and LTL, it (LTL) was not to enter into similar agreement with any other company. Such an agreement works to the advantage of tower CBI Vs. Ravi Kant Ruia and others Page 245 of 526 company. It is correct that this arrangement was highly advantageous and profitable to ETIPL. It is correct that at that time, ETIPL had approximately 3500 towers. It is correct that by this arrangement, LTL would have become an additional customer of ETIPL and would have used the same 3500 towers, which were being used by other users, depending upon network requirement. It is correct that when an additional tenant is added, the expenses to the tower company are not very high and in some cases, there may be no additional expenses......."
321. Both the witnesses deposed that this was a genuine transaction and the prosecution did not challenge their version of the transaction. It was the duty of the prosecution either to reexamine the witness or to seek crossexamination of the witness, but nothing was done. In an authority reported as Gangabhavani Vs. Rayapati Venkat Reddy and Others, AIR 2013 SC 3681, Hon'ble Supreme Court while dealing with the importance of crossexamination, wherein the witness should also have an opportunity to explain his position, observed in paragraph 17 as under:
"This Court in Laxmibai (Dead) Thr. L.Rs. & Anr. v. Bhagwantbuva (Dead) Thr. L.Rs. & Ors., AIR 2013 SC 1204 examined the effect of noncross examination of witness on a particular fact/circumstance and held as under:
"31. Furthermore, there cannot be any dispute with respect to the settled legal proposition, that if a party wishes to raise any doubt as regards the correctness of the statement of a witness, the said witness must be given an opportunity to explain his statement by drawing his attention to that part of it, which has been objected to by the other party, as CBI Vs. Ravi Kant Ruia and others Page 246 of 526 being untrue. Without this, it is not possible to impeach his credibility. Such a law has been advanced in view of the statutory provisions enshrined in Section 138 of the Evidence Act, 1872, which enable the opposite party to crossexamine a witness as regards information tendered in evidence by him during his initial examinationinchief, and the scope of this provision stands enlarged by Section 146 of the Evidence Act, which permits a witness to be questioned, inter alia, in order to test his veracity. Thereafter, the unchallenged part of his evidence is to be relied upon, for the reason that it is impossible for the witness to explain or elaborate upon any doubts as regards the same, in the absence of questions put to him with respect to the circumstances which indicate that the version of events provided by him, is not fit to be believed, and the witness himself, is unworthy of credit. Thus, if a party intends to impeach a witness, he must provide adequate opportunity to the witness in the witness box, to give a full and proper explanation. The same is essential to ensure fair play and fairness in dealing with witnesses."
With due respect, I may add that the authority deals with crossexamination of a witness by opposite party. However, the spirit of the authority applies to crossexamination by a party of its own witness also.
322. Furthermore, PW 52 Sh. Sandip Basu in his examinationinchief dated 25.04.2013, page 7, deposed about of payment of Rs. 700 crore by ETIPL to Loop Telecom Limited as under:
".......Question: Why ETIPL gave the aforesaid amount of Rs.700 crore, when in fact it was to receive payment as rental?
Answer: It was usual business practice to give CBI Vs. Ravi Kant Ruia and others Page 247 of 526 refundable advances in exchange of exclusivity of tower rollout contracts, which (exclusivity) ETIPL got from Loop Telecom Limited. I say this that when I was MD of Xcel Telecom Private Limited, I had approached several companies for this purpose including Loop Telecom Limited, though, this company was not in a position to give any advance........"
Thus, this witness also in his examinationinchief itself justified this contract as usual business practice.
323. DW 1 Sh. Neeraj Gupta, Executive Director, Essar Steel, also deposed about advance of Rs. 700 crore to Loop Telecom Limited by ETIPL, as the company was going to get order for 20,000 towers for next 20 years. He also deposed that this was done in a board meeting of ETIPL dated 25.08.2008, the minutes of which are Ex PW 56/DC. In the cross examination by the prosecution he denied the suggestion that it was not a prudent business transaction. In the cross examination of this witness, there is nothing of any significance which could discredit the evidentiary value of his deposition.
324. Thus, there is evidence on record that transfer of Rs. 700 crore was for commercial purpose. Thus, prosecution failed to prove that it was a device designed by Essar group to fund Loop Telecom Limited.
Credit Facilities by SBI
325. Prosecution examined two witnesses to prove the term loan of Rs. 725 crore and nonfund based credit facility of Rs. 812 crore to Loop Telecom Limited by State Bank of India.
CBI Vs. Ravi Kant Ruia and others Page 248 of 526PW 13 Sh. C. H. Narasimha Rao, Chief General Manager, SBI, Mumbai, deposed that vide sanction dated 22.10.2008, Ex PW 13/F (D269), the bank had sanctioned term loan of Rs.725 Crore and bank guarantee limit of Rs.812 Crore to Loop Telecom Limited. He also deposed that bank guarantee was given by Essar Power Limited, which was subsequently changed to Essar Steel Limited.
PW 20 Sh. Umesh Chandra Das, DGM, SBI, also deposed on the line deposed to by PW 13 Sh. C. H. Narasimha Rao. He also deposed that a letter of comfort was also given by Essar Shipping Limited.
These two witnesses have nowhere deposed that they processed the loan to Loop Telecom Limited as loan to Essar Group.
326. Thus, transfer of Rs. 700 crore by ETIPL to Loop Telecom Limited have been deposed to be genuine one. Similarly, the two witnesses from SBI also did not depose that the loan was processed to be loan to Essar. Hence, the argument of the prosecution that payment of entry fee was made by Essar group is not supported by legally admissible evidence.
Investment by Sh. I. P. Khaitan
327. It is the case of the prosecution that Sh. I. P. Khaitan did not make any investment of his own in the acquisition of licences by STPL. It is the case of the prosecution that this shows that entire payment was made by Essar group. Payment by Essar group indicates that it acquired 21 UAS licences in the CBI Vs. Ravi Kant Ruia and others Page 249 of 526 name of STPL.
328. On the other hand, defence refuted this argument by submitting that Khaitan had also made substantial investment in STPL and if some delay was there, it was due to the fact that he was facing difficulty in bringing his money to India.
329. Let me take note of evidence on record.
330. PW 12 Sh. Pawan Kumar, Assistant Vice President, Axis Bank, deposed about the account of BPL Mobile Communication Limited in Fort Branch, Mumbai. He also deposed about the money received by this company from Gypsy Rover. Relevant part of his examinationinchief dated 31.08.2012, page 2, reads as under:
"........Statement of account of CA No. 004010300020697 for the period 01.07.2007 to 31.12.2007 and 01.01.2008 to 30.06.2008 is now Ex PW 12/F and 12/G respectively (D389). Six certificates of foreign inward remittances (D390) are now Ex PW 12/H1 to H6. The remittances in Ex PW 12/H1 to H3 and H6 came from Gypsy Rover, Mauritius, and the remaining two came from Black Lion Limited, Port Louis. These are certified copies. The proceed of these remittances were credited to the aforesaid account of BPL Mobile Communications Limited........."
As per Ex PW 12/H1, an amount of Rs.
24,88,43,750/ was remitted on 04.03.2008; as per Ex PW 12/H2, an amount of Rs. 125,91,92,105/ was remitted on 30.07.2008; as per Ex PW 12/H3 an amount of Rs. 60,42,39,698/ was remitted on 08.07.2008; as per Ex PW 12/H6, an amount of Rs. 20,03,31,820/ was remitted on CBI Vs. Ravi Kant Ruia and others Page 250 of 526 24.03.2008, all by Gypsy Rover to BPL Communications Limited. As per Ex PW 12/H4 and H5, amounts of Rs. 94,34,40,250/ and Rs. 71,48,960/ respectively were remitted on 08.03.2008 by Black Lion Limited to BPL Communications Limited. It may be noted that Gypsy Rover and Black Lion are companies of Sh. I. P. Khaitan.
331. PW 24 Sh. Anupam Goel, Manager, Royal Bank of Scotland, Delhi, in his examinationinchief dated 05.11.2012, pages 1 and 2, also deposed about the payment received from Capital Global Limited by Shipping Stop Dot Com (India) (P) Limited as under:
".......I have been shown a productioncumseizure memo dated 08.06.2011, whereby I had handed over the documents mentioned therein to the IO. It bears my signature at point A on each page and the same is now Ex PW 24/A (D208). The documents handed over by me to the IO include original account opening form of account No. 800085 in the name of Loop Telecom (P) Limited at Mumbai branch No. 283 with its annexures, pages 6 to 105. The account opening form, with its annexures, is now collectively Ex PW 24/B (D209). Next is certified copy of statement of account of the said account (D210), pages 1 to 5, for the period 01.01.2007 to 03.06.2011 and is now Ex PW 24/C. Next is copy of RTGS advice from BPL Communications Limited, having account in ING Vysya Bank in favour of Shipping Stop Dot Com (India)(P) Limited for transfer of Rs.
139,65,00,000/. The same is now Ex PW 24/D (D211). Next is an original cheque issued from the authorized signatory of Shipping Stop Dot Com (India)(P) Limited drawn on account No. 800085 in favour of Imperial Consultants and Securities (P) Limited, for a sum of Rs. 138,65,00,000/ with CBI Vs. Ravi Kant Ruia and others Page 251 of 526 deposit slip. The same is now Ex PW 24/E (D212). The deposit slip is now Ex PW 24/E1. Next document is original swift message received from Capital Global Limited, Port Louis. However, the message was passed on to us by New York branch of HSBC Bank. The same is now Ex PW 24/F (D213). This message was for an amount of Rs.
174,11,90,512.50/ (US$ 43425000)........."
This witness deposed that Capital Global Limited transferred Rs. 174 crore to STPL on 26.03.2008.
332. Both these witnesses deposed about money received from Black Lion into Loop Telecom Limited and BPL Communications Limited in the year 2008. Annexed to D213 is a letter dated 26.03.2008 written by Loop Telecom Limited to ABN Amro Bank, Mumbai, informing that they had received an amount of Rs. 174 crore from Capital Global Limited towards contribution to share capital of the company as per Regulation 5.1 of Schedule 1 of FEMA Notification 20 dated 03.05.2000.
333. On the other hand, the prosecution relied upon D79, Ex PW 58/D1, in which an amount of Rs. 120 crore was transferred by Essar Teleholdings Limited to Asia Pacific Limited, a company of Sh. I. P. Khaitan. On the basis of this document, prosecution argued that, in fact, the money remitted by companies of Sh. I. P. Khaitan was parked by Essar group with the Khaitan companies. However, the chronological distance between the two transactions is so large that it cannot be accepted that it is the same money that ETHL had sent in 2004.
334. PW 25 Sh. Nilamadhab Mishra of Standard CBI Vs. Ravi Kant Ruia and others Page 252 of 526 Chartered Bank, proved documents relating to original account opening form of STPL in this bank, collectively Ex PW 25/G, pages 1 to 74 (D363). In this bunch of papers, there are specimen signature cards of the applicants, namely, Sh. Rohit Dave, Ex PW 85/G1 dated 14.07.2005, and Ms. Sangeeta Lakhi, Ex PW 85/G dated 08.02.2008. Both had signed on behalf of STPL. It may be noted that Sh. Rohit Dave has been examined as PW 33 and Ms. Sangeeta Lakhi has been examined as PW 34. Both have deposed that they were authorized by STPL. Ms. Sangeeta Lakhi is categorical in her statement that STPL was company of Sh. I. P. Khaitan. The prosecution deliberately did not put these documents to the two witnesses apparently in order to conceal the truth.
335. PW 52 Sh. Sandip Basu in his further examination inchief dated 16.04.2013, page 12, deposed about the documents relating to investment by I. P. Khaitan into telecom sector in India as under:
"......I have been shown letter dated 16.06.2011. It bears the signature of Sh. I. P. Khaitan at point A, which I identify. It also bears the initials of Sh. I. P. Khaitan on other pages at point A, which also I identify, as I interact with him regularly and have seen him writing and signing. The letter is now Ex PW 52/Q (D401). Through this letter, documents mentioned therein had been sent to the IO of this case......"
336. Document D401 has been placed on record by the prosecution itself. Annexed to this are numerous documents showing investment by Sh. I. P. Khaitan. In a letter dated CBI Vs. Ravi Kant Ruia and others Page 253 of 526 06.06.2011 written by Standard Chartered Bank, Dubai to I. P. Khaitan, it is mentioned as under:
"................................................................................. ................................................................................. We confirm that during this period, we have provided the I. P. Khaitan Group with banking and depository services. We further confirm that we are completely satisfied with the manner of conduct of the I. P. Khaitan Group in all of their relationship with us.
Based on a review of the bank statements and financial accounts of companies in the I P Khaitan Group that bank with us, we confirm that you, through these companies, have generated substantial revenues and profits during the period that these companies have banked with us and maintained cash deposits with us from time to time.
We are aware that you have made investment of approximately USD 160 million during the period 2005 to 2008 into the telecommunication sector in India, through your Mauritiusbased companies.
We confirm that the I. P. Khaitan Group had sufficient funds in deposits with us, generated out of revenues and profits, which were utilised as per Annexure1, to finance your downstream investments into various companies of the Loop Telecom Group.
................................................................................... ................................................................................."
337. In another letter of June 2011 (Annexure 'S'), Standard Chartered Bank, Dubai, intimated that Sh. I. P. Khaitan had maintained on average cash deposit with the bank in excess of US$ 300 million. There are other documents also annexed to CBI Vs. Ravi Kant Ruia and others Page 254 of 526 this letter which show investment made by the companies of I. P. Khaitan, including payment to CDC Financial Services, South Asia Regional Funds and others. Thus, Sh. I. P. Khaitan is shown to be a man of means, who also made investment in telecom sector in India.
338. The deposition of these witnesses shows that Sh. I. P. Khaitan had also made some investment in the companies. He is not a broke and, as such, it cannot be easily accepted that he was acting as dummy to Essar group.
Credit Facilities: Post Licence
339. It is the case of the prosecution that Loop Telecom had availed credit facilities from various banks and the guarantees for the same were also given by Essar Group. It is the case of the prosecution that in every case of bank credit to Loop Telecom Limited, companies belonging to Essar Group extended guarantee. It is also the case of the prosecution that personnel belonging to Essar Group were negotiating with the banks for credit facilities to Loop Telecom Limited. It is the case of the prosecution that these factors show that Loop Telecom Limited was used by Essar Group for acquiring another licence in violation of Clause 8.
340. On the other hand, defence argued that these credit facilities were extended by the banks to Loop Telecom Limited in its own right. It is the case of the defence that it may be that personnel of Essar Group were interacting with the banks but they were doing it for the reason that Essar Group was holding CBI Vs. Ravi Kant Ruia and others Page 255 of 526 9.99% indirect equity. At the same time, they were also extending help to I. P. Khaitan, who was a close relative of the promoters of Essar Group.
341. Let me take note of evidence on record.
PW 9 Sh. M. P. Haridas, General Manager, Central Bank of India, Mumbai, deposed that loan of Rs.500 Crore was sanctioned to Loop Telecom Limited vide sanction letter dated 29.09.2009, Ex PW 9/G (D240). He also deposed that the loan was guaranteed by Essar Global Limited.
PW 4 Sh. Anil Sharma, Assistant Joint Manager, also proved the documents relating to loan of Rs. 500 crore sanctioned by State Bank of India on 29.09.2009. These documents are Ex PW 4/A1 to A4, including deed of guarantee executed by Essar Global Limited.
PW 6 Sh. Sebastian P. T., Chief Manager, deposed that vide sanction letter dated 18.12.2009, Ex PW 6/C (D254), Federal Bank had sanctioned a loan of Rs.100 Crore to Loop Telecom Limited. He also deposed that this was an unsecured loan and the bank guarantee was furnished by Essar Global Limited.
PW 11 Sh. Arvind Shukla, Manager, Federal Bank Limited, also deposed that the corporate guarantee, Ex PW 11/F (D297) was executed by Essar Global Limited.
Thus, all the four witnesses deposed that guarantee for loan was extended by Essar Global Limited. Except extension of guarantee, there was no other involvement of Essar Group.
342. PW 71 Sh. Pranay Kumar, Assistant General CBI Vs. Ravi Kant Ruia and others Page 256 of 526 Manager, SBI, Mumbai, deposed that vide sanction letter dated 31.12.2009, Ex PW 71/A9 (D271), SBI had sanctioned a loan of Rs.400 Crore as shortterm loan to Loop Telecom Limited. He also deposed that corporate guarantee was given by Essar Global Limited.
However, in his crossexamination he deposed that Loop Telecom Limited was owned by I. P. Khaitan and Kiran Khaitan. Relevant part of his crossexamination dated 16.08.2013, page 6, reads as under:
".......It is correct that it was in my knowledge that Loop Telecom (P) Limited was owned by Sh. I. P. Khaitan and Ms. Kiran Khaitan and it was not part of Essar group, as during the processing of loan we had sought various clarifications. In note Ex PW 71/A7, I have noted that Essar group acquired majority stake in LMIL in 2005 from BPL group. This fact was not in my knowledge, but I had copied it from earlier note Ex PW 13/E (D269)......."
Thus, in crossexamination, this witness reiterated that Loop Telecom Limited belonged to I. P. Khaitan and Kiran Khaitan. In letter, Ex PW 71/A1, the Chief Financial Officer of the company had stated to the bank that Loop Telecom Limited was promoted by Kiran Khaitan and I. P. Khaitan. The bank was also informed that Essar Group had indirect equity of below 10%. The bank was also informed that Essar Group had invested Rs.1592 Crore in NCDs of STPL in 20052006. It was also informed that LMHIL had also invested Rs.2421 Crore of its funds generated from the monetization of some of its investments into debt instruments of Essar Group in the years CBI Vs. Ravi Kant Ruia and others Page 257 of 526 2006 and 2007. The bank was fully aware that Essar Group was having indirect minority interest. Bank had considered every aspect of the case in the light of Clause 8 of UASL Guidelines. This is clear from preliminary legal due diligence report, Ex PW 71/A2.
343. PW 48 Sh. P. Venugopal, the then Chief of Investment Operation, LIC, Mumbai, deposed that the Corporation had sanctioned a loan of Rs.600 Crore to Loop Telecom Limited vide sanction letter dated 28.01.2010, Ex PW 48/B23 (D290). He also deposed that the loan was guaranteed by Essar Global Limited.
344. PW 17 Sh. N. D. S. Chari, Vice President, SREI Equipment Finance (P) Limited, Mumbai, deposed that this company had extended loan facilities of Rs. 200 crore to Loop Telecom Limited vide offer letter dated 09.11.2010, Ex PW 17/A (D108). He also deposed that guarantee for the aforesaid loan was given by Essar Global Limited.
345. PW 27 Sh. Mukesh Kumar Soni, Vice President, SREI Ventures, Kolkata, also deposed on the same line as deposed to by PW 17. He also deposed that loan of Rs. 200 crore was sanctioned to Loop Telecom Limited to which guarantee was given by Essar Global Limited. Both witnesses have not said anything about Essar group.
346. DW 1 Sh. Neeraj Gupta, Executive Director, Essar Steel, also deposed that the proposal for purchase of equity worth Rs. 175 crore by ETHL Global Capital Limited in Loop Telecom Limited was a wellconsidered decision. He also CBI Vs. Ravi Kant Ruia and others Page 258 of 526 deposed that a sum of Rs. 175 crore was transferred by ETHL to Loop Telecom Limited. He also deposed that LTPL was informed about this vide letter Ex PW 42/DD, signed by Sh. Girish Sathe. He also deposed that the transaction did not go through and the money was returned. The witness also deposed that Sh. I. P. Khaitan also had invested Rs. 600 crore in the equity of Loop Telecom (P) Limited. In the crossexamination of this witness, there is nothing of any significance which could discredit the evidentiary value of his testimony.
347. DW 7 Sh. Ketan Shah, Vice President, Essar Steel, deposed that the guarantee extended by this company to SBI was extended for the reason that the company was charging commission as well as a counterguarantee was also given by Loop Mobile Holding (India) Limited. He proved a certified copy of account of Loop Mobile Holding (India) Limited in the books of Essar Steel Limited, Ex DW 7(A5)/X1, to prove the charging of commission.
348. DW 8 Sh. Rajinder Kumar Sethi, CFO, Essar Power Limited, also deposed that the company had charged commission for extending guarantee to SBI on behalf of Loop Telecom Limited and Loop Mobile Holding (India) Limited. He also proved the ledger extract Ex DW 8(A5)/X and certified copies of statement of account Ex DW 8 (A5)/Y1 to Y5 to prove the charging of guarantee commission. In the cross examination the witness denied that these two companies were the companies of Essar group.
349. It may be noted that vide note, Ex PW 88/C3 CBI Vs. Ravi Kant Ruia and others Page 259 of 526 (D166), licence agreements were approved to be signed with the company on 26.02.2008 and the same were signed on 29.02.2008, 03.03.2008, 04.03.2008 and 05.03.2008. It may be noted that spectrum was ordered to be allocated to Loop Telecom Limited in J&K service area on 17.12.2008. Similarly, in Gujarat service area, spectrum was ordered to be allocated on 23.09.2008. These are just two of the illustrative cases.
It may be noted that instant case is a case of cheating. In case of cheating, the intention is to be seen in the beginning of the transaction. All these events are much after the alleged event of cheating had happened, that is, grant of LOIs and signing of licence agreements. No record of allocation of spectrum has been produced before this Court.
Whether Banks treated Loop Telecom Limited as Essar Company?
350. It is the case of the prosecution that SBI, Central Bank and others treated Loop Telecom Limited as Essar company. It is the case of the prosecution that Loop Telecom Limited was in fact an Essar company.
This is countered by the defence submitting that there is no evidence on record.
351. PW 19 Sh. Venkat Govind Raghavan, Chief Financial Officer of Essar Group, in his examinationinchief itself did not support the prosecution version. In his examinationinchief dated 04.10.2012, pages 2 to 4, he deposed that STPL was not an Essar company and had approached banks on its own. His CBI Vs. Ravi Kant Ruia and others Page 260 of 526 examinationinchief reads as under:
".......Ques: What interaction took place between you as Group Chief Finance Officer and Vikash Saraf regarding credit facilities to Loop Telecom Pvt. Ltd. and when?
Ans: Sometimes in October, 2007, Mr Saraf told me that the Loop Telecom Pvt. Ltd., which had approached State Bank of India, for credit facilities through its officials could not get favourable response from the bank and enquired whether I could help them in the matter to which I agreed to help them by going to the bank alongwith the finance officials of the company, that is, Loop Telecom Ltd.
On visiting SBI, I met Mr. Narsimha Rao, General Manager, SBI, CAG branch, Mumbai alongwith the finance officers of Loop Telecom Ltd. On some occasions, Mr. Subramaniam of Loop Telecom Limited accompanied me to SBI. Myself and Mr. Subramaniam discussed the loan proposal with Sh. Narsimha Rao and requested for credit support. Mr. Narsimha Rao told us that since Loop Telecom Limited had no credit track record with the bank and the amount of credit facility sought was quite substantial, the bank could consider the proposal provided substantial security in the form of guarantees from any of the Essar group companies was given and that company, that is, the company standing guarantee, in turn, must also have good track record. After discussion I informed Mr. Vikash Saraf the requirement of the bank as put forward by Sh. Narsimha Rao. Sh. Vikash Saraf told me that he had discussed the matter and the guarantee sought by the bank would be forthcoming in due course. Initially the bank had indicated that it would be happy with the guarantee given by Essar Shipping Limited and Essar Steel Limited. However, subsequently, Essar Shipping Limited could not give the guarantee and the bank agreed to the guarantee of Essar Power Limited. After the issue of guarantee CBI Vs. Ravi Kant Ruia and others Page 261 of 526 was sorted out, the officials of Loop Telecom Limited took over and dealt with the bank for other terms and conditions.
The credit facilities sought by Loop Telecom Limited were in connection with licence for telecom business.
In the year 2009 also, Mr. Vikash Saraf requested me for helping the officials of Loop Telecom Limited in processing their application for credit facilities with Central Bank of India for roll out purposes. However, I did not go to Federal Bank. The bank desired to have guarantee of a company belonging to Essar group, which was having good track record, and I conveyed the same to Sh. Vikash Saraf. This time, Essar Global Limited furnished the guarantee.
Sh. Vikash Saraf informed me that Loop Telecom Limited belongs to Khaitan family. Ques: Did Mr. Vikash Saraf ever inform you as to why Essar group companies were standing guarantee for Loop Telecom Limited? Ans: He did not inform me.
SBI had extended credit facilities, both cash and guarantee, to the tune of about Rs. 1500 crore......."
He has reiterated this in his crossexamination also, pages 6 to 8, which reads as under:
"........Before my entering the scene regarding credit facilities to Loop Telecom Limited by the SBI and Central Bank of India, Loop Telecom officials had already interacted with the officials of SBI and Central Bank of India. Since I was having good rapport with the bank officials and was understanding banking requirements, I was asked to help them, that is, officials of Loop Telecom Limited, so that the loan could be smoothly processed. However, the substantive discussion was conducted by the officials of Loop Telecom Limited. At no stage CBI Vs. Ravi Kant Ruia and others Page 262 of 526 it was ever represented to the bank that Loop Telecom Limited was an Essar group company. The bank officials also never told that they were considering Loop Telecom Limited as an Essar group company.
When the guarantee was given to SBI by Essar Steel Limited, I was on the board of this company. One of the reasons for extending this guarantee by Essar Steel Limited to the bank for the benefit of Loop Telecom Limited was that BPL Communications Limited was providing counter guarantee to Essar Steel Limited.
It is correct that it was provided that in case of default by Loop Telecom Limited, Essar Steel Limited could claim the amount from BPL Communications Limited. It is correct that Essar Steel Limited also benefited by charging a commission of 1% per annum of the guaranteed amount for providing the guarantee. SBI never invoked this guarantee. It is correct that if such a guarantee is given in case of an Essar group company, neither such counter guarantee is given nor any commission is charged. The guarantee provided to bank by Essar Steel Limited was considered an arm's length transaction.
Myself and controller of accounts were responsible for preparing consolidated balance sheet of Essar Global Limited. A consolidated balance sheet of this company as on 31.03.2009 is D293. The same is correct and is now Ex PW 19/DA. None of Loop group companies or their associates or subsidiaries are mentioned in it."
This version of the witness was not challenged by the prosecution either by reexamination or by cross examination.
352. PW 31 Sh. Ketan Modi, Head (Revenue) of Loop Telecom Limited, deposed about loan availed from SBI. His CBI Vs. Ravi Kant Ruia and others Page 263 of 526 examinationinchief dated 18.12.2012, pages 1 and 2, reads as under:
"........In the corporate finance, I was to make business plans of the company and get it appraised by SBI Caps. In 2009, I was associated with the request of the loan made by Loop Telecom Limited to the SBI through SBI Caps. In this regard, I was associated with the preparation of business plan for this purpose. At that time, Sh. T. Sathisan was my immediate superior and Sh. Sandeep Basu was Chief Executive Officer of the company. I held discussion with both of these superiors of mine in the making of a request of loan and they used to advise us. My seniors told me that in a current loan of SBI, the corporate guarantee was given by Essar group and in the instant case also the corporate guarantee would be coming from that group........."
In his crossexamination, he deposed that Loop Telecom Limited was promoted by Sh. I. P. Khaitan. His deposition, page 3, reads as under:
"........As GM (Finance) of the company, I was aware that Sh. I. P. Khaitan was promoter of Loop Telecom Limited. It is also correct that Sh. T. Sathisan and Sh. Sandeep Basu used to be usually seen with him. I know Sh. Nalin Khaitan, who is son of Sh. I. P. Khaitan. I used to regularly interact with Sh. Nalin Khaitan in the course of business of the company. I alongwith Sh. Nalin Khaitan used to visit several banks, including SBI, in connection with the work of the company........"
The witnesses referred to above did not support the prosecution case. There is no other material on record that banks treated Loop Telecom Limited to be a company of Essar CBI Vs. Ravi Kant Ruia and others Page 264 of 526 group. Hence, this view is without merit.
353. In the end, in view of the above detailed discussion, there is no material on record that Loop Telecom Limited was in violation of Clause 8. The prosecution case can fail on this ground alone.
However, I proceed to consider other issues also in the light of material on record.
C. Sale of BPL Companies: Whether to Essar Group or I. P. Khaitan?
354. It is the case of the prosecution that BPL Communications Limited and its two subsidiaries viz. BPL Mobile Communication Limited and BPL Mobile Cellular Limited were purchased by Essar Group, though it was projected as if the same were purchased by Sh. I. P. Khaitan. It is the case of the prosecution that since BPL Communications Limited and BPL Mobile Communication Limited, the companies which held Loop Telecom Limited, belonged to Essar Group, Loop Telecom Limited was not eligible to apply for UAS licences on 03.09.2007.
On the other hand, defence argued that the BPL companies were in fact were acquired by Loop Group of I. P. Khaitan. It is the case of the defence that on the date of the applications, BPL Communications Limited and BPL Mobile Communication Limited were owned by I. P. Khaitan and as such Loop Telecom Limited was eligible to apply. Both parties have extensively invited my attention to the evidence led on CBI Vs. Ravi Kant Ruia and others Page 265 of 526 record.
Let me take note of the evidence on record.
Evidence of Sellers of BPL Group:
355. PW 41 Sh. Rajeev Chandrasekhar, who held 63.07% shareholding in BPL Communications Limited, in his examinationinchief dated 28.01.2013, pages 1 to 7, deposed about sale of his stake as under:
About the companies and ownership ".......I returned from US in 1990 and was presented with an opportunity of bidding for the newly opened up telecom sector, cellular licences in 1991. BPL was an existing company, owned by my fatherinlaw Sh. T. P. G. Nambiar. Accordingly, I applied for a telecom licence through this company to DoT for licences in Delhi, Mumbai, Kolkata and Chennai service areas. In 1994 our company was awarded licence for Mumbai service area. This licence was granted to BPL Mobile Communications Limited for Mumbai service area. Subsequently in 1996, the DoT invited through tenders, applications for telecom licences for other service areas in India. In that round of tendering, a new company formed by us by the name of BPL Cellular Limited, applied for licences for some service areas, which I do not remember. However, it was granted licences only for the service areas of Tamil Nadu (including Pondicherry), Maharashtra (including Goa) and Kerala. The licence for Mumbai service area was commissioned in October 1995. By 1998, the licences for other three service areas were also operationalized. Ques: What was the shareholding pattern of BPL Mobile Communications Limited and BPL Cellular Limited in the year 2004?
Ans: To the best of my recollection, the shareholding pattern in BPL Mobile Communications Limited was 74% equity held by BPL CBI Vs. Ravi Kant Ruia and others Page 266 of 526 Communications Limited and 26% held by foreign investors. In BPL Cellular Limited, to the best of my recollection, was 51% equity was held by BPL Communications Limited and 49% equity held by foreign investors.
Ques: What was the shareholding pattern of BPL Communications Limited, holding company of BPL Mobile Communications Limited and BPL Cellular Limited, in the year 2004?
Ans: To the best of my recollection, the finance companies controlled by me held about 53% equity of BPL Communications Limited and some about 25% equity was held by investment companies controlled by my fatherinlaw Sh. T. P. G. Nambiar and the balance was held by a group of foreign investors.
Ques: Could you please tell this Court as to who was looking after the daytoday affairs of the aforesaid three companies, that is, BPL Communications Limited and its two subsidiaries, in the year 2004? Ans: All three companies were managed by independent boards, which included nominees of Indian Financial Institutions, Foreign Investors and independent directors. I was Chairman and CEO of BPL Communications Limited and also chaired the boards of two subsidiaries, which had separate CEOs for each company. The CEO of BPL Mobile Communications Limited was Sh. Sandeep Basu and that of BPL Cellular Limited was Sh. Faust Cardoso.
Mr. Subramaniam was a member of managerial team. He was perhaps chief financial officer of BPL Mobile Communications Limited.
About the reason for sale Ques: What led you to sell your stake in BPL Communications Limited in 2004?
Ans: The company was beset with series of litigation between shareholders and this was affecting its ability to raise capital and make necessary investments to grow. Further, the principal CBI Vs. Ravi Kant Ruia and others Page 267 of 526 lender ICICI, which had the pledge of almost all of my shares, was refusing to restructure the loan, which was in default, and pressuring the company to either merge or sell. So, therefore, this alongwith the adverse publicity that was affecting the company's business and employee's morale left me with no option but to seek an honorable exit. Ques: Could you please tell this Court as to who were the persons/ companies with whom you negotiated for the sale of your stake in the aforesaid companies?
Ans: From the very beginning, that is, late 2004, the company engaged JM Morgan Stanley as its financial advisor to solicit/ evaluate buyers/ investors for the stakes in company. As part of this effort, various proposals were received and evaluated which included some that were unsolicited and included names such as foreign companies like Alfa Group, Orascom, Airtel, Reliance, Batata. However, all of these proposals could not be concluded due to the ongoing litigation and a condition by all investors that they would invest only subject to litigation being settled.
About the Purchaser In this background during a business conference, Sh. Ravi Ruia approached me and suggested that he could acquire my stake in BPL Communications Limited. I made it clear that I would be interested only if a proposal could be made to our financial advisors which did not have any preconditions of settling the litigation and that it would require for our advisors to be convinced about the availability of funds with the purchaser. Since Sh. Ravi Ruia confirmed that he was acting on behalf of some other investors and that he would assume the responsibility of settling the litigation and other government and regulatory approvals, I introduced my financial and legal advisors and internal team to his team to commence the CBI Vs. Ravi Kant Ruia and others Page 268 of 526 negotiations.
Ques: After your initial talk with Sh. Ravi Ruia, how did the negotiation proceed between you and him? Ans: There was no negotiation between him and me. The entire negotiations were conducted by JM Morgan Stanley, our financial advisors and our legal advisors, Doijode and partners, Mumbai, and company secretary Sh. Jagdish Rao, on our side and Sh. Vikash Saraf and their lawyers on their side. Ques: How the pricing of your stake was decided? Ans: As explained, the complete negotiations including that of valuation and legal indemnification of myself against any and all future claims was negotiated by the financial advisors and my team.
The total consideration amount for sale of my stake in BPL Communications Limited was Rs. 304 crore to the various investment companies. Court Ques: You are using two words for your companies, that is, "finance companies" and "investment companies". Please the correct nomenclature of your companies?
Ans: These four companies are investment companies.
Ques: Could you please tell this Court as to what was the mode of payment?
Ans: To the best of my recollection, Rs. 304 crore was divided into three payments at three stages. First payment of Rs. 20 crore was made before the commencement of negotiations between the two teams. This payment was received from ETHL. Subsequent payment of Rs. 30 crore was, I think, made at the time of signing of some agreements. This payment was also made by ETHL. The balance Rs. 254 crore was made at the closing date of transaction by Santa Trading.
Ques: What was the modus operandi of payment of Rs. 254 crore by Santa Trading?
Ans: I do not know the exact structure of payment of this amount, but my mandate to the financial advisor was that there would be no credit period or CBI Vs. Ravi Kant Ruia and others Page 269 of 526 delay for the payment due and so the financial advisors and the lawyers working with the purchaser's team evolved, I believe, a structure which ensured that we were paid and those payments were secured by collateral of shares. Ques: After receipt of Rs. 254 crore from Santa Trading, what did you do with this amount? Ans: The structure put together by the financial advisors entailed placing this amount as an Inter corporate Deposit (ICD) with ETHL for a specified duration at a specified interest secured by collateral of various shares of public listed companies of Essar group.
Ques: When were the ICDs repaid?
Ans: I do not remember the exact date, but they were repaid within a period of six months. Ques: Did you ever meet Sh. I. P. Khaitan during the aforesaid period?
Ans: No."
Thus, in his examinationinchief Sh. Rajeev Chandrasekhar was not clear as to whom he sold his stake. He admitted that Sh. Ravi Ruia had told him that he was acting on behalf of some other investors. He also deposed that the payment of Rs. 254 crore was made through a newly designed structure. Thus intent of Sh. Ravi Ruia was clear from day one that he was negotiating for some other buyer and not for keeping the companies with his group. In a criminal case it is intention that matters for finding out whether a crime has been committed or not.
356. PW 41 Sh. Rajeev Chandrasekhar in his further examinationinchief, pages 9 and 10, deposed that he was aware of substantial equity clause and his deposition reads as CBI Vs. Ravi Kant Ruia and others Page 270 of 526 under:
".......Since I was in telecom business from 1994 till 2005, I am acquainted with substantial equity clause in a licence agreement. As I understand this clause was to prevent market dominance and cartelization in any telecom market by having more than one operator owned by the same company in the same service area. The equity which can be held by an operator in another operating company in the same service area was ten per cent. The issue of this clause did not arise during discussion between Sh. Ravi Ruia and myself and subsequently also because one of the main conditions put forward by me was that all regulatory and government approvals were to be obtained by the purchaser. All the transaction documents were vetted and approved by independent legal advisors before we signed them.
I am not aware about the transaction relating to sale of stake by other stakeholders in BPL Communications Limited. I did not pay any attention to BPL Communications Limited after I sold my stake in it, so I am not aware of sale of stake in this company by the other stakeholders. Subsequently, I did not face any legal complication due to sale of my stake in BPL Communications Limited."
Thus, he was aware of the requirement of Clause 8 to the effect that one licensee company cannot buy another licensee company. He deposed that compliance to the clause was to be ensured by the purchaser. He also deposed that the transaction was vetted and approved by independent legal advisors before he signed the documents. What does it mean? It means that regulatory compliance was ensured before sale.
357. PW 41 Sh. Rajeev Chandrasekhar in his cross examination, pages 10 to 12, deposed about the purchaser in a CBI Vs. Ravi Kant Ruia and others Page 271 of 526 roundabout manner as under:
"It is correct that when Sh. Ravi Ruia met on the first occasion in a business conference, he told me that he had no liquidity with him and he was negotiating on behalf of other investors including Sh. I. P. Khaitan.
I have been shown a letter of assignment dated 02.07.2005, already Ex PW 40/J2 (D35), whereby share purchase agreement, already Ex PW 40/J, was assigned in favour of Santa Trading (P) Limited. It bears my signature at point at points B, C and D. On account of this agreement, STPL became the actual purchaser of shares of Vectra Holdings (P) Limited in BPL Communications Limited. The share purchase agreement was only an intent to purchase and was not an actual purchase. The share purchase agreements Ex PW 40/G, 40/H and 40/K, were similarly assigned in favour of STPL vide assignment letters Ex PW 40/G2, 40/H2 and 40/K2.
Share purchase agreement dated 15.07.2005, already Ex PW 33/A, was directly entered into by STPL and Epsilon Advisors (P) Limited regarding sale of its shares in BPL Communications Limited. I was not aware specifically as to on whose behalf Essar team was negotiating for purchase of my stake in BPL Communications Limited. However, on the date of closure of deal, I became aware that STPL would be the purchaser of shares of BPL Communications Limited, to the extent held by me.
I have no personal knowledge as to how the payment of Rs. 254 crore, as referred to above, was structured. I do not recollect the mode of payment of Rs. 254 crore by Jupiter Capital Advisors (P) limited to ETHL. I cannot say if it was by cheque, demand draft or RTGS. I do not recollect if I signed any instrument for effecting this transaction. I was not concerned about the mode of payment as it was devised by the financial advisors. It was not my concern to ensure compliance of substantial equity clause. All relevant documents regarding the deal were seen and vetted by my legal advisors. If an CBI Vs. Ravi Kant Ruia and others Page 272 of 526 operator wishes to hold more than ten per cent in another operating company in the same service area, it could do so after obtaining approval of DoT and that is what I mean by regulatory approvals.
I cannot say if my senior management was aware that the shares were being purchased by STPL. Apart from JM Morgan Stanley, one Mr. M. S. Ram was also involved in negotiation on my behalf, as part of my team."
In the crossexamination also, Sh. Rajeev Chandrasekhar deposed that Sh. Ravi Ruia had told him that he was negotiating on behalf of some other investors including Sh. I. P. Khaitan. Thus, Sh. Rajeev Chandrasekhar himself introduced the name of Sh. I. P. Khaitan.
358. Perusal of the deposition of PW 41 Sh. Rajeev Chandrasekhar also reveals that he is not sure as to on whose behalf Essar Group was negotiating with him. He could not say as to who was the real buyer of his stake. He came to know on the date of closure of the deal that STPL would be the buyer. He did not know as to whom STPL belonged. He did not know as to how payment of Rs. 254 crore was made. Thus, his evidence lacks clarity and assertiveness as to the buyer and is thus difficult to rely upon. His evidence is of no avail to the prosecution.
359. PW 29 Sh. Ajit Nambair, who was holding about 7.20% shares in BPL Communications Limited, also sold his shares. In his examinationinchief dated 17.12.2012, pages 1 to 4, he deposed about the sale of shares to ETHL as under:
"BPL (British Physical Laboratory) Limited was incorporated in 1963. Through this company, my CBI Vs. Ravi Kant Ruia and others Page 273 of 526 father Sh. T. P. G. Nambair started his electronics business.
In early 2000, BPL group entered telecom business. The telecom business was started through a company by the name BPL Communications Limited. Two subsidiary companies of this company were incorporated for telecom business, namely, BPL Cellular Limited for Tamil, Kerala and Maharashtra circles; and BPL Mobile Communications Limited for Mumbai circle.
BPL Limited was not a shareholder in BPL Cellular Limited. Its foreign shareholders included AIG, CDC etc. Its Indian shareholders were Electro Investment, Namfil etc. I do not remember if BPL Mobile Communications Limited was a shareholder in it.
I know Sh. Rajeev Chandrashekhar. He is my brotherinlaw, being married to my sister. Sh. Rajeev Chandrashekhar was also having a stake in BPL Cellular Limited as well as in BPL Mobile Communications Limited.
These two companies engaged in telecom business were not doing too well and there was pressure from the banks to return their loans, so we mandated the banks to sell their shares of the companies. There was also a dispute in the family pertaining to the shareholding of the two companies.
For the sale of shares of BPL Communications Limited of Nambair Group, I had discussion with a person known as Sh. Vikash Saraf. These discussions started in early part of 2005. We had mandated Morgan Stanley bank for sale of the stake in this company, so it must have contacted Sh. Vikash Saraf. I had two three meetings with Sh. Vikash Saraf. One Sh. Amit Gupta was also assisting Sh. Vikash Saraf. Sh. Vikash Saraf is present in Court today and I had discussion with this Vikash Saraf only.
Sh. Vikash Saraf was representing Essar group and the company was Essar Teleholdings Limited. I CBI Vs. Ravi Kant Ruia and others Page 274 of 526 know that promoters of Essar group are Sh. Ravi Ruia, though I have not met them. I am unable to recall the names of other promoters. I did not interact with Sh. Ravi Ruia during my discussion for the sale of stake of BPL Communications Limited. My father Sh. T. P. G. Nambair had also discussed the sale of stake with senior Ravi Ruia (objected to by Sh. S. V. Raju, learned Sr. Advocate, on the ground that it is a hearsay evidence).
Court Order: Objection Overruled as no part of the question comes in the realm of hearsay. It is direct question on a particular fact.
About the agreement This company sold its stake through a share purchase agreement. I was a party to the transaction of sale. I have been shown an original share purchase agreement dated 15.07.2005 entered into between three companies, namely, Electro Investment (P) Limited, Namfil Finance Co. (P) Limited and Nambair International Investment Co. (P) Limited, and two individuals, namely, Sh. T. P. G. Nambair and Sh. Ajit G. Nambair, on behalf of sellers and between Essar Teleholdings Limited, the buyer, and it Sh. T. P. G. Nambair alone signed on behalf of the sellers. I subscribed to the agreement as a witness. Signature of my father Sh. T. P. G. Nambair appears at points A, B, C, D and E, which I identify.
My signature as a witness appears at point F. The share purchase agreement is now Ex PW 29/A, (D42), running into seventeen pages. Sh. Amit Gupta signed on the agreement on behalf of Essar Teleholdings Limited at point G, which I identify as the signature was appended in my presence. Sh. Madhusudan, an Advisor to my father, also signed the agreement at point H. Apart from this, my father Sh. T. P. G. Nambair, on behalf of sellers, and Sh. Amit Gupta, on behalf of buyer, initialed each page of the agreement. The initials of my father are at point J and that of Sh. Amit Gupta appears at point CBI Vs. Ravi Kant Ruia and others Page 275 of 526 K. The agreement is also having eleven schedules attached to it and each page of this schedule also bears initials of my father Sh. T. P. G. Nambair and Sh. Amit Gupta at points A and B respectively. The agreement is at pages 1 to 17 and the schedules are at pages 18 to 38. The schedules are now collectively Ex PW 29/A1.
The sale proceed under the share purchase agreement of the company was approximately was Rs. 125 crore."
Thus, shareholding of Sh. Ajit Nambiar was purchased by ETHL, but it was below 10% and, as such, permissible by Clause 8.
360. ICICI Bank through ICICI Trusteeship Services also held 9.30% shareholding in BPL Communications Limited. It was also sold to STPL vide agreement dated 27.06.2006, Ex PW 30/B (D41).
PW 30 Sh. T. S. Suresh, Director (Legal) of ICICI Venture, who had signed the agreement on behalf of bank, in his examinationinchief, pages 2 and 3, deposed as under:
".......Through this letter, I had sent certified copy of agreement entered into between ICICI Trusteeship Services Limited and Santa Trading (P) Limited dated 27.06.2006 regarding sale of aforesaid pledged shares. This was certified by me under my signature on each page. I was also signatory to the agreement on behalf of ICICI venture Funds Management Company Limited as Investment Manager of ICICI Trusteeship Services Limited. The certified copy of agreement is now Ex PW 30/B (D 41), eleven pages. My signature appears at point A on the last page. My signature also appears on each page below the stamp "certified true copy". The nominee of purchaser did not sign in my presence.CBI Vs. Ravi Kant Ruia and others Page 276 of 526
I was authorized by ICICI Venture Funds Management Company Limited through a power of attorney. A certified copy of power of attorney in my favour is now Ex PW 30/C (D302). This was also sent by me to the IO through my letter dated 16.06.2011 now Ex PW 30/D (D301). The letter bears my signature at point A."
He did not say anything more. He did not say as to whom STPL belonged or who negotiated on behalf of STPL. I may add that agreement dated 27.06.2006, Ex PW 30/B, was signed on behalf of STPL by Ms. Kiran Khaitan. Thus, Ms. Kiran Khaitan was in the picture during the sale transaction of shares itself. Thus, neither Sh. Rajeev Chandrasekhar nor Sh. T. S. Suresh did say with assertiveness that the shares were purchased by Essar group in its own right.
Buyer's Evidence
361. PW 40 Sh. Amit Kumar Gupta was Consultant in Essar group from 2004 to 2007. He was involved in the purchase of shares of Sh. Rajeev Chandrasekhar. It is instructive to take note of his examinationinchief dated 23.01.2013, pages 6 to 16, which reads as under:
".........The process of negotiation of acquisition of BPL Mobile Communications Limited and BPL Communications Limited continued from 2004 onwards and I was involved at some stages of the acquisition. There was some interest which was bought by Essar group in the aforesaid companies. Vikash Saraf was also assisting Mr. I. P. Khaitan in some of the acquisitions undertaken by Mr. I. P. Khaitan's companies in the aforesaid two companies.
BPL Communications Limited was the holding CBI Vs. Ravi Kant Ruia and others Page 277 of 526 company of BPL Mobile Communications Limited and BPL Mobile Cellular Limited. BPL Mobile Communications Limited was having telecom licence for the Mumbai service area, whereas BPL Mobile Cellular Limited was having telecom licences for Maharashtra, Kerala and Tamil Nadu service areas. The equity of BPL Communications Limited was owned to the extent of approximately 63% by companies of Mr. Rajeev Chandrashekhar, approximately 7% by companies belonging to T. P. G. Nambiar, approximately 8% by ICICI, while the balance equity was owned by five foreign institutional investors. Additionally ICICI held non convertible debentures in the company and some of the shareholders also held nonconvertible preference shares in it.
The discussions with Sh. Rajeev Chandrashekhar were already underway when I joined the group in somewhere in JuneJuly 2004. The discussions continued after my joining the group. By the time I was involved in the process, the deal was already agreed, but documentation was pending. I participated in the documentation process. The group of Sh. Rajeev Chandrashekhar was represented by JM Morgan Stanley Limited. I do not know as to who had discussed about the pricing of equity shares. During the documentation process, I came to know that there was a dispute regarding legality of issuance of some of the shares owned by Sh. Rajeev Chandrashekhar. Essar Teleholdings Limited had entered into agreements with the sellers belonging to Sh. Rajeev Chnadrashekhar's group for shares other than the disputed ones. I was involved in the preparation of sharepurchase agreements.
I have been shown document D33 wherein there is a sharepurchase agreement dated 16.03.2005 entered into between Epsilon Advisors (P) Limited as seller and Essar Teleholdings Limited as purchaser regarding shares of BPL Communications Limited owned by seller company.CBI Vs. Ravi Kant Ruia and others Page 278 of 526
This agreement was executed in my presence. The signature of Sh. Vikash Saraf appears at point A on behalf of purchaser and that of Sh. Sanju. EV, director, Epsilon Advisors (P) Limited, at point B on behalf of seller, I identify both signatures. The share purchase agreement is now Ex PW 40/G, pages 3 to
20. This agreement was subsequently amended by the parties vide amendment dated 29.06.2005 and the amendment to it is now Ex PW 40/G1. This amendment was also signed by the aforesaid two persons at points A and B respectively.
I have been shown a letter dated 02.07.2005, which is an assignment letter, written by Essar Teleholdings Limited to Epsilon Advisors (P) Limited. This letter has been signed on behalf of Essar Teleholdings Limited by Vikash Saraf at point A. This was confirmed by Epsilon Advisors (P) Limited also under the signature of Sh. Sanju. EV at point B. The same is now Ex PW 40/G2. Through this letter, agreement Ex PW 40/G dated 16.03.2005 was assigned by Essar Teleholdings Limited to Santa Trading (P) Limited, which in effect meant that the shares were to be now bought by Santa Trading (P) Limited as it stepped into the agreement in place of Essar Teleholdings Limited as purchaser. ETHL was negotiating agreement Ex PW 40/G with intent to assign it to one of the companies owned by Sh. I. P. Khaitan, which company was subsequently identified as Santa Trading (P) Limited. There was no negotiation between Essar Teleholindings and I. P. Khaitan as the agreement itself was entered into with intent to assign it to a company of I. P. Khaitan. When the documentation had started, it came into my knowledge that the agreement was to be assigned to a company of I. P. Khaitan. Each page of the agreement Ex PW 40/G has been initialed by both parties.
I have been shown document D34 wherein there is a sharepurchase agreement dated 16.03.2005 entered into between Coimbatore CBI Vs. Ravi Kant Ruia and others Page 279 of 526 Cablenet (P) Limited as seller and Essar Teleholdings Limited as purchaser regarding shares of BPL Communications Limited owned by seller company. This agreement was executed in my presence. The signature of Sh. Vikash Saraf appears at point A on behalf of purchaser and that of Sh. Joseph Verghese, authorized signatory of Coimbatore Cablenet (P) Limited, at point B on behalf of seller, I identify both signatures. The sharepurchase agreement is now Ex PW 40/H, pages 3 to 16. Each page of the agreement has been initialed by both parties. This agreement was subsequently amended by the parties vide amendment dated 29.06.2005 and the amendment to it is now Ex PW 40/H1. This amendment was also signed by the aforesaid two persons at points A and B respectively.
I have been shown a letter dated 02.07.2005, which is an assignment letter, written by Essar Teleholdings Limited to Coimbatore Cablenet (P) Limited. This letter has been signed on behalf of Essar Teleholdings Limited by Vikash Saraf at point A. This was confirmed by Coimbatore Cablenet (P) Limited also under the signature of Sh. Joseph Verghese at point B. The same is now Ex PW 40/H2. Through this letter, agreement Ex PW 40/H dated 16.03.2005 was assigned by Essar Teleholdings Limited to Santa Trading (P) Limited, which in effect meant that the shares were to be now bought by Santa Trading (P) Limited as it stepped into the agreement in place of Essar Teleholdings Limited as purchaser. ETHL was negotiating agreement Ex PW 40/H with intent to assign it to one of the companies owned by Sh. I. P. Khaitan, which company was subsequently identified as Santa Trading (P) Limited. There was no negotiation between Essar Teleholindings and I. P. Khaitan as the agreement itself was entered into with intent to assign it to a company of I. P. Khaitan. When the documentation had started, it came into my knowledge that the agreement was to be assigned to a company of I. P. CBI Vs. Ravi Kant Ruia and others Page 280 of 526 Khaitan.
I have been shown document D35 wherein there is a share purchase agreement dated 16.03.2005 entered into between Vectra Holdings (P) Limited as seller and Essar Teleholdings Limited as purchaser regarding shares of BPL Communications Limited owned by seller company. The agreement was also signed by Sh. Rajeev Chandrashekhar as a seller party and BPL Communications Limited as confirming party of the share purchase agreement. This agreement was executed in my presence. The signature of Sh. Ravi Ruia appears at point A on behalf of purchaser and that of Sh. Rajeev Chandrashekhar, authorized signatory of Vectra Holdings (P) Limited, at point B on behalf of seller. He also signed at points C and D on behalf of himself as well as on behalf of BPL Communications Limited. I identify all signatures. I know Ravi Ruia as he is one of the promoters of Essar group. I can identify him if he is shown to me. (Court Observation: Exempted for today from appearance in Court, subject to the condition that identity shall not be disputed).
The sharepurchase agreement is now Ex PW 40/J, pages 3 to 28. Each page of the agreement has been initialed by both parties. This agreement was subsequently amended by the parties vide amendment dated 29.06.2005 and the amendment to it is now Ex PW 40/J1, pages 29 and 30. This amendment was signed by Vikash Saraf at point A on behalf of purchaser and by Sh. Rajeev Chandrashekhar on behalf of seller, himself and BPL Communications Limited at points B, C and D. I have been shown a letter dated 02.07.2005, which is an assignment letter, written by Essar Teleholdings Limited to Sh. Rajeev Chandrashekhar, Vectra Holdings (P) Limited and BPL Communications Limited. This letter has been signed on behalf of Essar Teleholdings Limited by Vikash Saraf at point A. This was confirmed by Vectra CBI Vs. Ravi Kant Ruia and others Page 281 of 526 Holdings (P) Limited, Sh. Rajeev Chandrashekhar and BPL Communications Limited under the signature of Sh. Rajeev Chandrashekhar at points B, C and D. The same is now Ex PW 40/J2. Through this letter, agreement Ex PW 40/J dated 16.03.2005 was assigned by Essar Teleholdings Limited to Santa Trading (P) Limited, which in effect meant that the shares were to be now bought by Santa Trading (P) Limited as it stepped into the agreement in place of Essar Teleholdings Limited as purchaser. ETHL was negotiating agreement Ex PW 40/J with intent to assign it to one of the companies owned by Sh. I. P. Khaitan, which company was subsequently identified as Santa Trading (P) Limited. There was no negotiation between Essar Teleholindings and I. P. Khaitan as the agreement itself was entered into with intent to assign it to a company of I. P. Khaitan. When the documentation had started, it came into my knowledge that the agreement was to be assigned to a company of I. P. Khaitan.
I have been shown document D36 wherein there is a share purchase agreement dated 16.03.2005 entered into between Tayana Consult (P) Limited as seller and Essar Teleholdings Limited as purchaser regarding shares of BPL Communications Limited owned by seller company. This agreement was executed in my presence. The signature of Sh. Vikash Saraf appears at point A on behalf of purchaser and that of Sh. Anto Joseph, director, Tayana Consult (P) Limited, at point B on behalf of seller. I identify both signatures. The share purchase agreement is now Ex PW 40/K, pages 3 to 19. Each page of the agreement has been initialed by both parties. This agreement was subsequently amended by the parties vide amendment dated 29.06.2005 and the amendment to it is now Ex PW 40/K1, pages 24 and 25. This amendment was also signed by the aforesaid two persons at points A and B respectively.
I have been shown a letter dated 02.07.2005, CBI Vs. Ravi Kant Ruia and others Page 282 of 526 which is an assignment letter, written by Essar Teleholdings Limited to Tayana Consult (P) Limited. This letter has been signed on behalf of Essar Teleholdings Limited by Vikash Saraf at point A. This was confirmed by Tayana Consult (P) Limited also under the signature of Sh. Anto Joseph at point B. The same is now Ex PW 40/K2. Through this letter, agreement Ex PW 40/K dated 16.03.2005 was assigned by Essar Teleholdings Limited to Santa Trading (P) Limited, which in effect meant that the shares were to be now bought by Santa Trading (P) Limited as it stepped into the agreement in place of Essar Teleholdings Limited as purchaser. ETHL was negotiating agreement Ex PW 40/K with intent to assign it to one of the companies owned by Sh. I. P. Khaitan, which company was subsequently identified as Santa Trading (P) Limited. There was no negotiation between Essar Teleholindings and I. P. Khaitan as the agreement itself was entered into with intent to assign it to a company of I. P. Khaitan. When the documentation had started, it came into my knowledge that the agreement was to be assigned to a company of I. P. Khaitan.
I have been shown another amendment dated 15.07.2005 to share purchase agreement dated 16.03.2005, Ex PW 40/K, between Tayana Consult (P) Limited and Santa Trading (P) Limited, as by that date Santa Trading had stepped into the shoes of the purchaser after the assignment as above. The same is now Ex PW 40/K3, pages 20 to 23. This amendment is signed by Sh. Anto Joseph on behalf of Tayana Consult (P) Limited and by Sh. Rohit Dave on behalf of Santa Trading (P) Limited. However, I am unable to identify signature of Sh. Rohit Dave.
I have also been shown a share purchase agreement dated 15.07.2005 entered into between Epsilon Advisors (P) Limited as seller and Santa Trading (P) Limited as purchaser, already Ex PW 33/A (D37). This has been signed by Sh. Sanju, EV, director, on behalf of sellers, at point B, which I CBI Vs. Ravi Kant Ruia and others Page 283 of 526 identify.
The payment for purchase of shares vide aforesaid share purchase agreements was made by Santa Trading (P) Limited to the sellers. The total payment made in this regard was Rs. 304 crore.
When discussions were underway for purchase of shares of Sh. T. P. G. Nambiar in the aforesaid companies, I was involved in the negotiation with Vikash Saraf. However, by that time the price had already agreed between the parties. The shares of Sh. T. P. G. Nambiar were purchased by Essar Teleholdings Limited. I was on the board of Essar Teleholdings Limited from January 2007 till 2012, when I left the group. ETHL had bought approximately eight per cent equity of BPL Communications Limited from Sh. T. P. G. Nambiar alongwith some preference shares. When I joined the negotiations, Vikash Saraf told me that price had already been agreed and only detailed documents remained to be done.
I have been shown share purchase agreement dated 15.07.2005 (D42), already Ex PW 29/A, between T. P. G. Nambiar, Ajit G. Nambiar, Electro Investment (P) Limited, Namfil Finance Co. (P) Limited and Nambiar International Investment Co. (P) Limited, collectively sellers, and Essar Teleholdings Limited, purchaser. On behalf Essar Teleholdings Limited, I signed this agreement at point G. On behalf of all sellers, it was signed by Sh. T. P. G. Nambiar at points A to E. Each page of this agreement has been initialed by Sh. T. P. G. Nambiar and myself, pages 1 to 38. These shares were finally purchased by Essar Teleholdings Limited pursuant to this agreement and to my knowledge, later on these shares were sold to a company of I. P. Khaitan, perhaps Santa Trading (P) Limited........."
The witness categorically deposed in his examinationinchief itself that shares of Sh. Rajeev CBI Vs. Ravi Kant Ruia and others Page 284 of 526 Chandrasekhar were finally purchased by STPL, a company of Sh. I. P. Khaitan. He also deposed that payment was made by STPL. This version of the witnesses had gone unchallenged by the prosecution.
362. PW 40 Sh. Amit Kumar Gupta in his examinationin chief dated 24.01.2013, pages 3 and 4, deposed about transfer of Rs. 50 crore to STPL by Essar group. His deposition reads as under:
".........I know Sh. Saket Agarwal as he is a relative of Khaitans and Ruias. I had a conversation with him regarding a transaction of Rs. 50 crore. I was told by Sh. Vikash Saraf somewhere in 2005 that Essar group was to give Rs. 50 crore to Santa Trading (P) Limited (STPL), a company of Khaitans. Since the money was available with Essar Projects Limited, and it was not to give any loans, but could give only advances to persons with whom it had commercial transactions and since Sh. Saket Agarwal's group had dealings with Essar Projects Limited, the money could be advanced to any of his companies for further on lending to STPL and transaction could be reversed once alternate liquidity was available in the Essar group. To the best of my knowledge, STPL issued debentures to a company of Saket Agarwal........."
The argument of the prosecution is that this transfer was in a designed manner and company of Sh. Saket Aggarwal was used as a conduit to transfer the money. However, the witness has justified the transfer. No question was put to the witness about the desirability or legality of the transaction. The prosecution is challenging the transaction only by way of arguments at the bar. In the absence of any contrary evidence, CBI Vs. Ravi Kant Ruia and others Page 285 of 526 the submission of prosecution cannot be accepted.
This witness categorically deposed that BPL Communications Limited and its two subsidiaries were purchased by Sh. I. P. Khaitan. In his examinationinchief dated 24.01.2013, page 1, he deposed as to how BPL Mobile Cellular Limited was sold to Hutchison Essar Limited. His deposition reads as under:
".........I have been shown a share purchase agreement dated 25.11.2005 (D55) entered into between BPL Communications Limited as the vendor, Hutchison Essar Limited as purchaser and BPL Mobile Cellular Limited, the company, whose shares were subject matter of this agreement. This was the agreement through which Hutchison Essar agreed to buy the shares of BPL Mobile Cellular Limited from BPL Communications Limited. BPL Mobile Cellular Limited was having telecom licence for three circles, that is, Maharashtra, Kerala and Tamil Nadu service areas. This agreement has been signed by Sh. P. Ratan Raj for BPL Communications Limited, Sh. Shivendra Gupta for Hutchison Essar Limited and Sh. Vikash Saraf for BPL Mobile Cellular Limited. I identify signature of Sh. Vikash Saraf at point A and the agreement is now Ex PW 40/Q, pages 1 to 24............."
363. It is in evidence that Sh. P. Ratanraj signed for BPL Communications Limited. Sh. P. Ratanraj was examined as PW 95 and he deposed that he was a director in BPL Mobile Communication Limited and was executing the decisions taken by Sh. I. P. Khaitan. The prosecution did not put any question about the nature of this sale to him and was content with just proving the agreement Ex PW 40/Q. In his further examination CBI Vs. Ravi Kant Ruia and others Page 286 of 526 inchief dated 24.01.2013, pages 2 and 3, he deposed about the sale of BPL Mobile Communication Limited to HEL and how the sale could not be completed. His deposition reads as under:
"........I have also been shown photocopy of an agreement dated 23.12.2005 entered into between Hutchison Essar Limited as purchaser, Essar Teleholdings Limited, BPL Communications Limited and Capital Global Limited, all three as vendors and BPL Mobile Communications Limited, the company whose shares were agreed to be sold under this agreement. It bears signature of P. Ratanraj for BPL Communications Limited, Sh. Vikash Saraf for ETHL, Sh. Mohanan Aniyath for Capital Global Limited, signature of signatory of Hutchison Essar Limited, and Sh. Vikash Saraf for BPL Mobile Communications Limited. I identify signature of Sh. Vikash Saraf only at points A and B. The agreement is now Ex PW 40/T, pages 15 to 31, D400. The transaction contemplated in the agreement did not materialize for the reason that Hutchison Essar already had licence for Mumbai service area and for this reason required DoT approval, which could not be obtained in time. I have also been shown addendum to this agreement dated 30.03.2006 by which long stop date for the completion of transaction contemplated in the aforesaid agreement was extended, the purchase price was revised upwards and one more party was added to the agreement. It has been signed by me at point A on behalf of ETHL, by Sh. Vikash Saraf at point B on behalf of BPL Mobile Communications Limited and of Sh. Geoff Carolan, director, Hutchison Essar Limited, at point C, which I identify. Signatures of parties also appear at the next page minus that of signatory of Capital Global Limited. This happened as the agreement was signed in counterparts. The amendment to agreement is now Ex PW 40/T1. This agreement could also not be executed as the required approval of DoT could not be obtained in CBI Vs. Ravi Kant Ruia and others Page 287 of 526 time........."
Thus, the gist of evidence of Sh. Amit Gupta is that Sh. I. P. Khaitan was the prime mover behind purchase of BPL companies and their sale to HEL.
The agreements Ex PW 40/T as well as addendum Ex PW 40/T1 were signed by Sh. P. Ratanraj also. As already noted above, Sh. P. Ratanraj was not questioned by the prosecution about these documents and as PW 95 he deposed that he was executing the decisions of Sh. I. P. Khaitan.
Purchase of Foreign Shareholding
364. Furthermore, 20.43% shares of BPL Communications Limited were held by overseas companies. PW 40 Sh. Amit Kumar Gupta deposed about purchase of these shares from overseas companies by Black Lion, a Mauritius based company owned by I. P. Khaitan. His examinationin chief dated 23.01.2013, pages 19 and 20, reads as under:
".......Some shares of BPL Communications Limited were also held by foreign investors apart from some preference shares. These foreign investors were Mauritius based. I was also involved in the negotiation for the purchase of some of these shares and preference shares with Sh. Vikash Saraf and our lawyer. These shareholders were five companies including CDC Financial Services, South Asian Regional Fund, Deccan Asian Infra, Aidtel Holdings and Inditel Holdings. I was involved in negotiation only with CDC Financial Services and South Asian Regional Fund. These discussions took place in March April 2005. The price had already been agreed by the time I joined the negotiations and only documentation remained to be done and in this CBI Vs. Ravi Kant Ruia and others Page 288 of 526 regard I was taking instructions from Vikash Saraf and Sh. I. P. Khaitan. In the documentation, Vikash Saraf was not involved.
I do not know as to who had participated in price negotiations with CDC Financial Services and South Asian Regional Fund as by the time I joined the negotiation, price had already been settled. The shares of these two companies were purchased by Black Lion, a Mauritius based company, owned by I. P. Khaitan. I had signed equity share call agreement on behalf of Black Lion with CDC Financial Services and South Asian Regional Fund. A photocopy of the agreement dated 12.04.2005 has been shown to me and the same is correct and is now Ex PW 40/P (D48), pages 1 to 43. It bears my signature on page 22 at point A. The signatory on behalf of two seller companies signed at points B and C in my presence. Similarly, preference share sale agreement was also signed by me with CDC Financial Services (Mauritius) Limited, pages 44 to 55. I signed on behalf of black Lion on page 55 at point A and authorized signatory of seller company signed at point B in my presence. The same is now Ex PW 40/P1......."
The witness deposed that shares of overseas companies were purchased by the companies of Sh. I. P. Khaitan.
365. PW 40 Sh. Amit Kumar Gupta in his cross examination dated 24.01.2013, pages 6 to 11, deposed that shares of BPL Communications Limited and its subsidiaries were purchased by Sh. I. P. Khaitan and this was done after taking legal opinion. He also deposed about sale of investment by ETHL to STPL. His deposition reads as under:
".........It is correct that I was involved in some of the transactions regarding acquisition of BPL Telecom business by Sh. I.P. Khaitan. I was involved in the CBI Vs. Ravi Kant Ruia and others Page 289 of 526 process of documentation and documentation involved settling down large number of terms and conditions, apart from pricing. It is correct that I was involved in negotiating terms and conditions other than pricing, as part of the documentation. When I am involved in the process of negotiation of terms and conditions, I am supposed to be acquainted with the intent of the transaction and also to interact with various parties and this happened in this case also.
I know that Ms. Kiran Khaitan is sister of Sh. Ravi Kant Ruia and Sh. Shashi Kant Ruia. Sh. I.P. Khaitan is husband of Ms. Kiran Khaitan.
I have been shown board minutes of ETHL, D23, earlier Ex PW 18/B and therein, at page no. 9, the minutes of board meeting held on 15.10.2004. Since, I was involved in several BPL transactions, I am acquainted with this resolution also. This resolution has been signed by Sh. Vikash Saraf as Chairman of the meeting, at point A, which I identify. The resolution is now Ex PW 40/DA. These minutes recorded that Essar group had decided to help Sh. I.P. Khaitan in his acquisition of controlling interest in BPL Communications Limited. I was aware of this when I was negotiating terms and conditions other than pricing. I am also aware that through this resolution, ETHL also desired to purchase shares, both equity and preference, and debentures of BPL Group Companies to the extent legally permissible.
Subsequent to this resolution, need for obtaining legal opinion on the aforesaid issue was felt and the same was obtained and Mr. Prem Rajani, Advocate was consulted in this regard. His brief was that ETHL wanted to acquire only those number of shares and debentures, which were legally permissible, of BPL group companies. After examining documents, Guidelines etc., he initially gave oral opinion in the presence of Vikash Saraf and myself. Later on, he also gave his written CBI Vs. Ravi Kant Ruia and others Page 290 of 526 opinion. I have been shown a certified copy of written opinion dated 04.04.2005 given by Sh. Prem Rajani of Rajani Associates. It is the same opinion which was given by him and the same is now Ex PW 40/DB. Vikash Saraf was also aware of this written opinion. The written opinion as well as the oral opinion was same. ETHL followed the advice of Sh. Prem Rajani regarding acquisition of shares and debentures to the extent it was legally permissible. Following this legal advice, ETHL bought 9.99% equity shares of BPL Mobile Communications Limited, approximately 7% equity shares of BPL Communications Limited, certain nonconvertible preference shares of BPL Communications Limited and certain nonconvertible debentures of BPL Communications Limited and in view of ETHL, it was a legally permissible acquisition. ETHL never intended to operate the telecom business of BPL Telecom Business. Essar group/ ETHL bought these shares/ debentures mostly from loans obtained by it and some money from group companies.
Remaining 93% equity of BPL Communications Limited was purchased by Khaitans. Khaitans also purchased about 16% equity of BPL Mobile Communications Limited. These purchases were done by the Khaitans through their various investment companies, both Indian and overseas. I do not know if the payment for these purchases were made by Khaitans. However, I know that these purchases were not made by Essar. To my knowledge, Essar had also not made the payment for the aforesaid purchases.
The aforesaid purchases were made by the ETHL at a good price. By good price I mean, less than fair value.
Court Ques: You have already stated that you were not involved in the price negotiation, then how could you say that these purchases were made by ETHL at less than fair value?
Ans: I was not involved in the price negotiation, but CBI Vs. Ravi Kant Ruia and others Page 291 of 526 since I was involved in telecom business, so I know that it was less than fair price.
The aforesaid purchases were made by ETHL in the expectation that the subsidiaries of BPL Communications Limited would be sold to Hutchison Essar Limited and in that process they would get good return based on the expected price on sale to Hutchison Essar Limited.
The 9.9% stake of BPL Communications Limited was purchased by ETHL for Rs. 120 crore as mentioned in Ex PW 34/DA, page 6. The expectation of the company was that on the sale of this stake to Hutchison Essar Limited, the expected value of this stake would be Rs. 140 crore.
ETHL bought preference shares from T. P. G. Nambiar as well as from Black Lion and for that it paid Rs. 159 crore in aggregate. The redemption value of these preference shares was approximately Rs. 175 crore. When ETHL bought the debentures from ICICI Bank, it was bought for Rs. 410 crore against their accrued value of Rs. 525 crore at that time. At the time of redemption, the redemption value would have gone to the extent of interest accrued, but I cannot say if the figure could be Rs. 636 crore.
The 7% equity held by Sh. T. P. G. Nambiar in BPL Communications Limited was purchased by ETHL for Rs. 100 crore. Based on the price offered by Hutchison Essar Limited, ETHL could have realized more than Rs. 100 crore for this equity, but I cannot say if it could be Rs. 111 crore.
It is correct that ETHL bought the aforesaid shares, both equity and preference, and debentures for itself to make profit and not on behalf of I. P. Khaitan. These were not purchased with intention to transfer the same to I. P. Khaitan.
It is correct that when Hutchison Essar Limited did not get required permission from DoT, agreement dated 23.12.2005 Ex PW 40/T, as amended subsequently on 30.03.2006 was CBI Vs. Ravi Kant Ruia and others Page 292 of 526 terminated and this led to a dispute between Hutchison Essar Limited and BPL Communications Limited. It is correct that when this dispute arose between Hutchison Essar Limited and BPL communications Limited, only then ETHL decided to sell the aforesaid shares, both preference and equity, and debentures to STPL. In my view, ETHL decided to sell the aforesaid stake to STPL as it was a insignificant stake and there was a dispute also between Hutchison Essar Limited and BPL Communications Limited and for these two reasons there may not be any other buyer for it. This happened after a few months of termination of agreement. When the aforesaid stake was sold by ETHL to STPL, they made a small profit, but I cannot say if it was Rs. 10 crore.
I do not remember if advances to Saket Agarwal's Oblique Trading (P) Limited were made by Essar Constructions Limited and not by Essar Projects Limited. I am not aware if Essar Projects Limited merged with Essar Constructions Limited. The company which gave the advances to Saket Agarwal's company had business dealings with it, but I am not sure if it was Essar Constructions Limited. It is correct that I am not aware of any other funding given by Essar group to Khaitans for purchase of BPL group.........."
Thus, in crossexamination also Sh. Amit Gupta deposed that 93% equity of BPL Communications Limited was purchased by Sh. I. P. Khaitan.
366. PW 40 Sh. Amit Kumar Gupta in his cross examination dated 08.04.2013, pages 1 to 11, deposed as to why share purchase agreements were entered with ETHL. He also deposed about purchase of investment of ETHL and overseas companies by I. P. Khaitan. His deposition reads as CBI Vs. Ravi Kant Ruia and others Page 293 of 526 under:
About purchase of BPL shares ".......I was involved in the negotiation and documentation regarding sale of shares of BPL Communication by the companies owned by Rajiv Chandra Shekhar. It is correct that for negotiation on behalf of Rajiv Chandra Shekhar, M/s J.M. Morgan Stanley was involved. Both myself and J.M. Morgan Stanley were aware that these negotiations being carried out on behalf of I.P. Khaitan. Court Question: On whose behalf were you involved in these negotiations?
Answer: Essar Teleholdings Limited with the intention to assign the agreement to I.P. Khaitan.
It is correct that in the process of negotiation, I met I.P. Khaitan in the presence of Vikas Saraf. It is correct that in this process, I also had telephonic conference calls between myself, Vikas Saraf and I.P. Khaitan. It is correct that at that time, I was aware that I.P. Khaitan was a nonresident Indian living in Dubai. It is correct that as per the regulations prevalent at that time regarding FDI, these shares could only have been acquired by an Indian, since BPL Communication was holding a UAS licence through its subsidiaries. It is correct that in the process of negotiation, I was aware that ICICI Bank was exerting pressure on Sh. Rajiv Chandra Shekhar to repay the loan. However, I do not know, if the pressure was to sell his shares. It is correct that Sh. Rajiv Chandra Shekhar was also negotiating with other parties for selling his shares in BPL Communications Limited. It is correct that since there was pressure of Sh. Rajiv Chandra Shekhar to repay the loan, he required liquidity and as such was in a hurry to sell the shares. As per my understanding, at that time Sh. I.P. Khaitan was not having any Indian company. However, he wanted to establish an Indian company to buy the shares of BPL Communications Limited. It is correct that establishing an Indian company or acquiring an CBI Vs. Ravi Kant Ruia and others Page 294 of 526 Indian company for the purpose of acquiring shares of BPL Communications Limited could take some time. It is correct that since Sh. Rajiv Chandra Shekhar was in a hurry to sell the shares and Sh. I.P. Khaitan was not having an Indian company, it was decided as a middle path that agreement to purchase shares of BPL Communications Limited would be entered between ETHL and companies of Sh. Rajiv Chandra Shekhar with an assignment clause. This assignment clause was with the intention that agreement would be assigned to company of I.P. Khaitan, as and when, he either establishes or acquires his own company. It is correct that ultimately Sh. I.P. Khaitan acquired an Indian company, with the name Santa Trading Private Limited (STPL) with hundred percent shares in the name of his wife Ms. Kiran Khaitan. It is correct that after this was done, agreements entered into between ETHL and companies of Sh. Rajiv Chandra Shekhar were assigned to STPL. It is also correct that ultimately these shares of BPL Communications Limited were purchased by STPL. It is correct that ETHL only entered into agreements but never actually acquired the shares. It is correct that ETHL only entered into agreements. It is also correct that its intention was never to buy the shares. It is also correct that this was done to prevent Sh. Rajiv Chandra Shekhar from selling his shares to others. It is also correct that this was done to ultimately transfer these shares to Sh. I.P. Khaitan. It is correct that four agreements already Ex PW.40/G, Ex PW. 40/H, Ex PW.40/J and Ex PW40/K contain assignment clause for the aforesaid purpose.
It is correct that Epsilon Advisors Private Limited was a company owned by Sh. Rajiv Chandra Shekhar and was having equity shares in BPL Communications Limited. It is correct that there was a dispute between Sh. Rajiv Chandra Shekhar and T.P.G. Nambiar regarding validity of some of the shares of BPL Communications Limited. It is correct CBI Vs. Ravi Kant Ruia and others Page 295 of 526 that as long as, the dispute was not resolved, these disputed shares could not be sold by Sh. Rajiv Chandra Shekhar. It is correct that ultimately this dispute was resolved after Essar Teleholdings Limited bought shares of Sh. T.P.G. Nambiar. It is correct that when the dispute between Sh. Rajiv Chandra Shekhar and Sh. T.P.G. Nambiar was resolved, STPL had already been acquired by Sh. I.P. Khaitan. It is correct that on account of this reason, these shares were directly acquired by STPL by entering into an agreement already Ex PW.33/A (D 37). In acquisition of these shares, ETHL was not involved at all.
It is correct that when agreement already Ex PW.40/J (D35) was signed by Sh. Ravi Ruia, I was also present. It is correct that this agreement was originally intended to be signed by Sh. Vikas Saraf. It is correct that at that time, Sh. Rajiv Chandra Shekhar was also present and he requested Sh. Ravi Ruia to sign this agreement and in deference to his wishes Sh. Ravi Ruia signed this agreement on spur of the moment.
About funding It is correct that shares of all companies of Sh. Rajiv Chandra Shekhar were sold for an amount of Rs.304 crore. It is correct that I was involved in the negotiations as to how payment of Rs.254 crore was to be structured. It is correct that on behalf of Sh. Rajiv Chandra Shekhar, M/s J.M. Morgan Stanley was involved in these negotiations. It is correct that during negotiations, it was suggested that temporary funding of Rs.254 crore would be required by STPL, which was to be done by Sh. Rajiv Chandra Shekhar group. It is correct that during negotiations, M/s J.M. Morgan Stanley was ready to provide the funding but it was not ready to give the funding to STPL since it was a new company. It is correct that during negotiations, a middle path was found to the effect that funding would be provided by Sh. Rajiv CBI Vs. Ravi Kant Ruia and others Page 296 of 526 Chandra Shekhar group to ETHL who would pass it to STPL. It is correct that during negotiations, it was decided that STPL would return this amount of Rs. 254 crore after it sold its shares of subsidiaries of BPL Communications Limited to Hutchison Essar Limited. It is correct that it was also decided once STPL sold its shares, it would return this amount to ETHL and ETHL would return it to Sh. Rajiv Chandra Shekhar group. It is correct that neither of the three parties involved namely STPL, ETHL and companies of Sh. Rajiv Chandra Shekhar group, were having liquidity to this tune at that time. It is correct that at that time, it was decided that all these companies would open their respective bank accounts in the same bank to ensure flow of the aforesaid amount. It is correct that three accounts were opened in American Express Bank, Mumbai in the name of ETHL, STPL and Jupiter Capital Advisors Private Limited, a company of Sh. Rajiv Chandra Shekhar for the aforesaid purpose. It is correct that all the three companies gave instructions together to the bank to ensure flow of the aforesaid amount.
Court Question: You have stated above that none of the three parties were having liquidity. In such a situation, how the flow of fund started initially, that is, from where the money came?
Answer: Since all the receiving and paying parties had accounts at the same branch and no party was to pay amounts exceeding what they were to receive under instruments banked simultaneously, the payments could clear against the receipts without involving actual movement of cash.
It is correct that in effect Rs.254 crore was transferred from Jupiter Capital Advisors Private Limited to ETHL and from ETHL to STPL and from STPL to other four companies of Sh. Rajiv Chandra Shekhar. These transfers took place simultaneously. It is correct that technically Sh. Rajiv Chandra Shekhar provided credit of Rs.254 crore to ETHL and CBI Vs. Ravi Kant Ruia and others Page 297 of 526 ETHL to STPL but in effect the transaction had the result of Sh. Rajiv Chandra Shekhar providing credit to STPL guaranteed by ETHL. It is correct that ETHL never intended to fund and in effect never funded the acquisition of aforesaid shares by STPL.
About termination of agreement with HEL It is correct that somewhere in June 2006, I was asked by Sh. Vikas Saraf to participate in a telephonic conference with Sh. I.P. Khaitan regarding termination of agreement with HEL for sale of shares in BPL Mobile Communications Limited. It is correct that during this conference, Sh. I.P. Khaitan expressed his desire to terminate the agreement in case the permission for merger from Department of Telecommunication was not received in time. It is correct that during this conference, Sh. Vikas Saraf told Sh. I.P. Khaitan that he was not in favour of termination of this agreement and he (I.P. Khaitan) should consider further extension of time, if approval was not received in time. It is correct that during this conference, Sh. I.P. Khaitan said that he was not willing to give extension of time as during this period, according to him, the value of telecom licence for Mumbai service area had substantially increased. It is correct that after this conference, Sh. I.P. Khaitan decided to terminate the agreement with HEL after the expiry of long stop date in the agreement. It is correct that after this termination, Sh. Vikas Saraf discussed with me that Sh. I.P. Khaitan was not willing to reverse his decision regarding termination of aforesaid agreement. It is correct that during this period, Sh. Vikas Saraf also discussed with me the implication of this termination to HEL and Essar relations with Hutchison. It is correct that Sh. Vikas Saraf also discussed with me that he would be recommending to the board of ETHL that it should sell all its shares and debentures in the BPL companies.
Court Question: What led Sh. Vikas Saraf to discuss CBI Vs. Ravi Kant Ruia and others Page 298 of 526 these sensitive matters with you?
Answer: Because I had assisted him in these transactions and was also part of the Essar team dealing with Hutchison Essar Limited and Hutchison.
About sale of ETHL investment It is also correct that during the discussion, it was discussed that it was difficult to find a buyer for these shares and debentures of BPL Communications Limited held by ETHL other than Sh. I.P. Khaitan himself, because of ongoing dispute with Hutchison Essar Limited arising from the termination of the agreement for sale of BPL Mobile Communications Limited to Hutchison Essar Limited. It is correct that as per the board resolution already Ex PW18/C2, ETHL decided to sell the aforesaid shares and debentures to STPL. It is correct that ETHL could not sell 9.99% equity shares held by it in BPL Mobile Communications Limited as there was a stay order by the Hon'ble Bombay High Court.
About overseas companies It is correct that there were five foreign share holders of BPL Communications Limited. It is correct that these five foreign share holders sold their shares to two foreign companies namely Capital Global Limited and Black Lion Limited, both companies of Sh. I.P. Khaitan. It is correct that I was involved in one of these transactions between CDC and SARF as sellers and Black Lion Limited as purchaser. It is correct that I was not involved in the negotiations for the sale of remaining foreign shareholding. It is correct that before joining Essar Group, I had interacted with CDC Group (Commonwealth Development Corporation), which owned CDCFS and SARF, so I was familiar with it. Before joining Essar, I was working with SSKI Corporate Finance Limited, an investment banking firm and interacted with CDC Group, which was a leading private equity fund, in relation to several transactions. It is correct CBI Vs. Ravi Kant Ruia and others Page 299 of 526 that since I was acquainted with CDC Group from before, Sh. Vikas Saraf offered my services to Sh. I.P. Khaitan for negotiating with CDC Group. It is correct that this suggestion of Sh. Vikas Saraf was accepted by Sh. I.P. Khaitan and I assisted him (I.P. Khaitan) in documentation of this transaction with CDC. It is correct that during this documentation, I interacted with Sh. I.P. Khaitan on number of occasions. In this process, I was representing Black Lion Limited. It is correct that ultimate decision regarding this transaction was being taken by Sh. I.P. Khaitan. It is correct that as per resolution dated 08.04.2005 of board of director of Black Lion Limited, I was authorized to finalize and execute the agreements and related documents, on behalf of Black Lion Limited, with CDCFS and SARF. A copy of resolution is now Ex PW40/DC(D133). Pursuant to this resolution, I executed agreements dated 12.04.2005, already Ex PW40/P and Ex PW40/P1 (D48). It is correct that both these companies were foreign based and fully owned by Sh. I.P. Khaitan. It is correct that at this time, dispute was going on between Sh. Rajiv Chandra Shekhar, Sh. T.P.G. Nambiar and foreign share holders. It is correct that regarding these agreements money was paid prior to the signing of these agreements. It is correct that because of disputes the share price of these shares had fallen. It is correct that CDC wanted full payment of these shares to be made upfront whereas actual transfer of these shares from CDCFS and SARF was subject to settlement of various disputes. It is correct that in this Black Lion Limited took great commercial risk. It is correct that ETHL purchased preference shares as well as equity shares from Sh. T.P.G. Nambiar and on this, the dispute was substantially resolved. It is also correct that on account of this, the true value of shares was unlocked. It is correct that thereafter on 26.07.2005, ETHL entered into an agreement with Black Lion Limited for purchase of 14870000 preference shares CBI Vs. Ravi Kant Ruia and others Page 300 of 526 of BPL Communications Limited. The share purchase agreement dated 26.07.2005 entered into between Black Lion Limited and ETHL, bears my signature at point A. The agreement is now Ex PW40/DC1 (D133). It is correct that ETHL purchased these shares from Black Lion Limited at the rate of 90 per share totaling to Rs.133,83,00,000/. It is correct that the payment of this amount was made to Black Lion Limited after the signing of agreement. It is correct that ETHL purchased similar preference shares from Sh. T.P.G. Nambiar at the higher price of Rs.100/ per share. I do not know as to from where Black Lion Limited arranged the fund for the aforesaid purchases from CDC. It is correct that the money which was paid by ETHL to Black Lion Limited was not used by it in making the aforesaid purchases from CDC......."
In this crossexamination he reaffirmed, in great detail, that the entire transaction was done by Sh. I. P. Khaitan. His deposition is replete with references to Sh. I. P. Khaitan and his role in the purchase of BPL companies.
367. PW 40 Sh. Amit Kumar Gupta in his further cross examination dated 09.04.2013, pages 1 and 2, justified the purchase by ETHL of the shares of BPL Mobile Communication Limited from Asia Pacific Systems Limited for Rs. 120 crore. His deposition reads as under:
"........It is correct that I was involved in the process whereby ETHL purchased 9.99% shares of BPL Mobile Communications Limited from Asia Pacific Systems Limited (APSL). I do not know if in this process, Sh. I. P. Khaitan was representing APSL and Sh. Vikash Saraf was representing ETHL, as I was not involved in this. However, I knew it that the price agreed for these shares was Rs. 120 crore. It is correct that a valuation exercise of these shares was CBI Vs. Ravi Kant Ruia and others Page 301 of 526 got carried out by BPL Communications Limited through its auditors. I had seen that report of the auditors. I have been shown a certified copy of that report, shown to have been prepared by A. F. Ferguson & Company and to the best of my recollection, it is the same report. The same is now Ex PW 40/DD. The valuation of total equity was Rs. 1306 crore to Rs. 1382 crore. It is correct that 9.99% of these shares were purchased by ETHL at a discounted price of Rs. 120 crore and, as such, it was a good bargain for it. It is correct that these shares were purchased by ETHL in the expectation that the same would be sold to HEL and in this they would earn a profit. It is correct that for this reason the purpose for this was not to park the funds with Sh. I. P. Khaitan........."
PW 40 Sh. Amit Kumar Gupta in his further cross examination dated 09.04.2013, pages 8 and 9, deposed as to why he became authorized signatory for BPL Communications Limited and his deposition reads as under:
"........It is correct that Vikash Saraf informed me that I. P. Khaitan wanted some reliable people based in Mumbai to become signatories to bank accounts of various BPL companies for administrative convenience. It is correct that he also requested me to become one of such signatories. It is correct that for this reason I became an authorized signatory for the companies of I. P. Khaitan, but I cannot say about others. It is correct that only three persons, that is, I. P. Khaitan, other board members or the CEO, gave instructions for the operation of these bank accounts. It is correct that I had no independent authority to operate these bank accounts. It is correct that Vikash Saraf was a director on the board of BPL Communications Limited since December 2004. It is correct that as per letter dated 04.10.2006, already Ex PW 32/B7, written by CBI Vs. Ravi Kant Ruia and others Page 302 of 526 Vikash Saraf to bank mentions me as one of the authorized signatories to operate the bank account. This letter was written by Vikash Saraf in the capacity of authorized signatory of BPL Mobile Communications Limited. I do not know if he was authorized signatory of BPL Mobile Communications Limited on account his being a director in the company........."
Thus, the perusal of evidence of this witness shows that in his examinationinchief as well as crossexamination, he justified the entire transaction relating to sale of BPL Communications Limited to Sh. I. P. Khaitan. He is categorical that in the purchase of BPL companies, he was acting for Sh. I. P. Khaitan. The prosecution did not challenge his version.
PW 40 Sh. Amit Gupta also deposed that before acquiring BPL companies, legal opinion was taken from Sh. Prem Rajani, Advocate. It is also instructive to take a look on the evidence of witness who gave the legal opinion.
Legal Opinion on Acquisition of BPL Group
368. PW 75 is Sh. Prem Rajani, Advocate/ Solicitor, who drafted the agreements for sale of BPL Communications Limited and also participated in the negotiations. He deposed that he was working as per the instructions of I. P. Khaitan. Relevant part of his examinationinchief dated 19.09.2013, pages 1 to 3, reads as under:
".......Essar group is one of many clients of my firm since the beginning of the firm. Essar Steel, Essar Power, Essar Telecom, Essar Oil etc., are my clients from the Essar group. I was on the board of only one CBI Vs. Ravi Kant Ruia and others Page 303 of 526 company of Essar group only for a small period of time and the name of the company was Essar Projects.
I know Sh. Vikash Saraf. I met him for the first time in 1996, when I was working with M/s Crawford Bayley and Co., a law firm in Mumbai. At that time, he was working with SSKI, an investment banking company, Mumbai. Thereafter, I met him after about four five years and then he told me that he was working with Essar Telecom. He had met and told me at this point of time in connection with proposed acquisition of BPL Mobile Communication Limited, operating for Mumbai telecom service area and BPL Mobile Cellular Limited having telecom licence for Kerela, Maharashtra and Tamil Nadu and their parent company BPL Communications Limited by Sh. I. P. Khaitan. He asked for my legal services in this regard. My legal services included documentation, advising about Indian laws etc. Many documents were prepared by us for purchase of shareholding of various sellers. The largest shareholder was Sh. Rajeev Chandrasekhar, Sh. T. P. G. Nambiar, France Telecom, ICICI Bank and three four other small shareholders. I participated in the negotiation and documentation with Sh. Rajeev Chandrasekhar, lawyers of Sh. T. P. G. Nambiar, lawyers of ICICI Bank, and also with Hong Kong law firm for two foreign sellers.
................................................................................... ...................................................................................
I did charge legal fee for my services and it was charged from Essar group. I was supposed to raise invoice on companies of Sh. Khaitan. However, he (I. P. Khaitan) told me that he would pay my fee only after selling a company being acquired to Hutchison Essar, to which I was not agreeing as I needed the money. Accordingly, I raised my invoice on Essar companies and I received my fees amounting to Rs. 40 lac.
I had also been on the board of BPL Mobile CBI Vs. Ravi Kant Ruia and others Page 304 of 526 Communication Limited, operating telecom licence for Mumbai service area. I became director on the board of this company after acquisition was completed. I joined the board of this company on the request of Sh. I. P. Khaitan and Sh. Vikash Saraf. The process of acquisition of the three companies, that is, the parent company and its two subsidiaries, took about seven eight months. The process of acquisition started approximately in JulyAugust 2004 and was completed in Februarymarch 2005......"
In the examinationinchief itself, Sh. Prem Rajani deposed that he was working for Sh. I. P. Khaitan.
This witness was crossexamined by the learned Public Prosecutor wherein he denied the suggestion that Essar Group was acquiring BPL Communications Limited and its two subsidiaries.
369. In his long crossexamination by defence, pages 6 to 11, Sh. Prem Rajani reiterated that he was working for I. P. Khaitan regarding the acquisition of BPL Communications Limited and its two subsidiaries. The crossexamination reads as under:
About purchase of BPL Companies "I had given my legal opinion to ETHL. That opinion is already Ex PW 40/DB and it bears my signature at point A and its contents are correct. It is correct that in the end of 2004, Sh. Vikash Saraf and Sh. Amit Gupta approached me to seek my opinion regarding the extent to which ETHL could purchase equity shares, preference shares and debentures of BPL Communications Limited. When Vikash Saraf and Amit Gupta approached me, I was already working on behalf of Khaitan group in the acquisition of BPL's Telecom business. I considered all the relevant CBI Vs. Ravi Kant Ruia and others Page 305 of 526 factors and I advised them that acquisition of less than 25% of equity share capital of BPL communications Limited by ETHL would not violate the substantial equity clause contained in condition VIII of amendment II to the licence agreement for Mumbai service area. I also say that acquisition of NCDs and preference shares would not violate the clause 8 of UASL Guidelines. Before that I had also given an oral legal opinion on the similar lines four months back.
It is correct that at that time Sh. Vikash Saraf told me that ETHL would purchase only that much as was legally permissible.
I have been shown agreements already Ex PW 40/G, 40/H, 40/J and 40/K, as well as letters already Ex PW 40/G2, 40/H2, 40/J2 and 40/K2, and all these documents were drafted by me on the same day. The later four are assignment letters. It is correct that in these four letters the actual buyer has been shown as Sh. I. P. Khaitan and I was aware of this fact when first four agreements were drafted. It is correct that the four agreements were executed between Rajeev Chandrasekhar's companies and ETHL. However, the shares were not going to be actually purchased by ETHL but were going to be assigned to the companies of I. P. Khaitan. It is correct that I was aware that Sh. I. P. Khaitan was NRI and could not directly buy these shares on account of restrictions on FDI by RBI. It is correct that at that time I. P. Khaitan was looking for an Indian company who could buy these shares. Again said, he was desirous of forming an Indian company as Sh. Khaitan himself told me this fact. It is correct that formation of a company takes sometime in India. It is correct that I was informed that Sh. Rajeev Chandrasekhar was in a hurry to sell his shares in the BPL companies and he was not going to wait till the formation of an Indian company by Sh. I. P. Khaitan.
It is correct that in all the four assignment CBI Vs. Ravi Kant Ruia and others Page 306 of 526 letters, the name of I. P. Khaitan's company was left blank as at that time it was not known as what would be the name of the company. It is correct that the draft of four assignment letters were shown to the sellers/ their lawyers before the four agreements were signed.
About Operational decisions of companies It is correct that the operational decisions were taken by the board of BPL Mobile Communication Limited after discussion in the board meeting. I say this for the meetings in which I was present. I was an independent director on the board. It is correct that whether to invest or not to invest or to appoint anyone on the board and such like decisions were taken by the board of the company as per the directions of Sh. I. P. Khaitan. It is correct that I did not receive any instruction regarding the decision of the board of this company either from Vikash Saraf or Sh. Ravi Ruia or Sh. Anshuman Ruia.
It is correct that the two meetings of the board of this company were held at the Essar House on account of convenience of the members. The office of my firm is situated at Church Gate. Essar House is closer to my office as compared to the office of BPL.
I know that Ajay Madan was a director on the board of BPL Mobile Communication Limited, but I do not know him personally. It is correct that the board meeting of this company held on 28.09.2006 was chaired by me, the minutes of which are already Ex PW 56/A (D16). It is correct that BPL Communications Limited was a company of I. P. Khaitan. It is also correct that Ajay Madan was appointed on the board of BPL Mobile Communication Limited on the instructions of BPL Communications Limited. It is correct that I did not receive any instruction from Vikash Saraf regarding appointment of Ajay Madan on the board of this company.
I do not know Sh. S. Subramaniam personally CBI Vs. Ravi Kant Ruia and others Page 307 of 526 but I know him as I was on the board of BPL Mobile Communication Limited and he was its CFO when the company was acquired by I. P. Khaitan. In the aforesaid meeting, appointment of Sh. S. Subramaniam was ratified by the board as CEO of the company. It is correct that he was appointed as CEO on the instruction of Sh. I. P. Khaitan. It is correct that as CEO, S. Subramaniam was reporting to board of directors. I did not receive any instruction from Vikash Saraf regarding his appointment as CEO.
It is correct that I requested my colleague Ms. Sangeeta Lakhi to join the board of various Loop companies and I did so on the request of Sh. I. P. Khaitan.
It is correct that Vikash Saraf while asking for my legal services had also told me that Sh. I. P. Khaitan was brotherinlaw of Sh. Ravi Ruia. It is correct that I had also interacted with Sh. I. P. Khaitan during the process of acquisition of BPL group companies by him. It is correct that I. P. Khaitan was giving instruction to me regarding acquisition by his group and Vikash Saraf was giving instruction regarding acquisition by Essar group.
About the payment of fees It is correct that before starting the work on BPL transaction, I had requested Vikash Saraf that ETHL should secure my fee since I had not dealt with Khaitan group earlier. It is correct that when the acquisition process was over, Vikash Saraf asked me to raise two invoices of my legal fees, one on the ETHL and other on the companies of I. P. Khaitan, for the work done for two groups as I worked for the two groups. I spoke to Sh. I. P. Khaitan asking him as to on which company to raise the bill. At that time only he told me that he would be able to pay my legal fees only after the sale of acquired companies to HEL and that would take sometime. However, I needed the money urgently and this was told by me CBI Vs. Ravi Kant Ruia and others Page 308 of 526 to Vikash Saraf reminding him of his assurance to secure my fee. For this reason, I raised the consolidated bill on ETHL. It is correct that I used to receive Rs. 10,000 as sitting fee, whenever I attended the board meeting of BPL Mobile Communication Limited and this amount was paid by this company itself."
Thus, the deposition of the witness shows that BPL Communications Limited and its subsidiaries were acquired by I. P. Khaitan.
370. On the same lines is the testimony of PW 34 Ms. Sangeeta Lakhi, who was an associate of PW 75 Sh. Prem Rajani. In her examinationinchief dated 19.12.2012, pages 1 to 7, she deposed that she was working for I. P. Khaitan. Her deposition reads as under:
".......I am acquainted with BPL Communications Limited. I got acquainted with this company when Sh. I. P. Khaitan, who owns a company by the name APSL, wanted to acquire this company. I know quite a few people of Essar group including Vikash Saraf, Amit Gupta, Girish Sathe, Jayant D'souza etc. Sh. Girish Sathe has since left and one Ms. Arunima has come in his place. I know so many other people also, whose name I am unable to recall now.
When Sh. I. P. Khaitan wanted to acquire BPL Communications Limited, I was working on the first part of the transaction. In the first part, there was a sale of shares of 9.99% between APSL and ETHL (Essar Teleholdings Limited). ETHL is a company of Essar group. ETHL bought 9.99% shares from APSL of BPL Mobile Communications Limited.
Mr. Prem Rajani was on the board of Loop Mobile (India) Limited, as far as I remember. I was on the board of directors of four companies of Essar group and these were Santa Trading (P) Limited, CBI Vs. Ravi Kant Ruia and others Page 309 of 526 Loop Mobile Holding, Loop Mobile (India) Limited and Loop Telecom Limited. Sh. Prem Rajani asked me to come on the board of directors of these companies. Moreover, these companies were also looking for directors. I had given my consent to be on the board of directors of these companies, which is required under the Companies Act. I have DIN also.
About BPL Communications Limited I have been shown minutes of BPL Communications Limited, D19, now collectively Ex PW 34/A, and in these minutes there are also minutes of board meetings dated 31.05.2007, 18.07.2007, 04.08.2007, 03.09.2007, 15.10.2007, 24.10.2007, 08.11.2007, 03.12.2007, 19.12.2007, 07.01.2008 and 08.02.2008. I was present in these meetings and on 31.05.2007 I was appointed as an additional director. All these minutes have been correctly recorded and are now Ex PW 34/A1 to A 11.
Initially the meeting dated 31.05.2007 was presided over by Sh. P. Ratnaraj. All these minutes have been signed by Ms. Kiran Khaitan, chairman of the meeting at point A on each minutes, which I identify. I know Ms. Kiran Khaitan well and I can identify her.
Court Observation: Accused I. P. Khaitan and his wife accused Ms. Kiran Khaitan were permitted to leave the court at about 10:30 AM on the request of Sh. Mahipal Ahluwalia, learned Advocate, as accused I. P. Khaitan was not feeling well. Identity of both accused is not disputed by Sh. Mahipal Ahluwalia.
In minutes Ex PW 34/A2 dated 18.07.2007, a proposal regarding investment in Shipping Stop Dot Com (India) (P) Limited was discussed and I participated in the discussion. BPL Communications wanted to acquire Shipping Stop Dot Com (India) (P) Limited pursuant to a business strategy and to acquire a UAS Licence in the name of this company.CBI Vs. Ravi Kant Ruia and others Page 310 of 526
There was no proposal before the board to acquire a UAS Licence in the name of BPL Communications Limited and whatever proposal was there was discussed and recorded in the minutes. When the proposal was taken up for discussion, it was in our knowledge that Shipping Stop Dot Com (India) (P) Limited was an Essar group company.
About BPL Mobile Communication Limited I have been shown board minutes of Loop Mobile (India) Limited, formerly BPL Mobile Communications Limited, D16, now Ex PW 34/B, wherein there are minutes of the board meetings of the company held between 23.02.2005 to 20.12.2007. I am unable to recall as to on which date I was appointed as a director on the board of this company, though I do recall that I was a director in this company. However, on looking the board minutes dated 15.12.2006, now Ex PW 34/B1, I find that I was appointed on the board of this company on this date. I attended the board meeting held on 28.03.2007 as a director and minutes of this date are now Ex PW 34/B2. Thereafter, I attended the board meeting held on 20.12.2007 and the minutes of these meeting are now Ex PW 34/B3. The minutes have been correctly recorded. The meetings held on 28.03.2007 and 20.12.2007 were chaired by Sh. Vikash Saraf. I came to know Sh. Vikash Saraf perhaps in the year 200405 as my firm was giving them legal services. He was involved when ETHL acquired 9.99% stake of BPL Communications Limited from APSL. The board minutes Ex PW 34/B2 dated 28.03.2007 have been signed by Sh. Vikash Saraf at point A, which I identify. The board minutes of 20.12.2007 Ex PW 34/B3, was signed by Dr. T. K. Makopadhayay, one of the directors, at point A, whose signature I identify. The board meetings were held at the address recorded in the minutes.
I have been shown minutes of the board CBI Vs. Ravi Kant Ruia and others Page 311 of 526 meeting of aforesaid company for the period 07.02.2008 to 29.12.2010, now Ex PW 34/C (D17). I had attended the meetings held on 07.02.2008, 03.07.2008, 15.09.2008, 26.08.2009, 22.12.2009, 27.05.2010 and 29.10.2010 the minutes have been correctly recorded and are now Ex PW 34/C1 to C7. The board minutes Ex PW 34/C1, C2 and C3 have been signed by Sh. Vikash Saraf and I identify his signature at point A. The board minutes Ex PW 34/C4, C5 and C6 have been signed by Sh. Rajeev Sahni and I identify his signature at point A. The board minutes Ex PW 34/C7 have been signed by me at point A. About Shipping Stop Dot Com (India) (P) Limited I have been shown board minutes of Shipping Stop Dot Com (India) (P) Limited (D5) for the period 200708 to 200809, now Ex PW 34/D and therein are board minutes for the dates 16.08.2007, 24.08.2007, 31.08.2007, 01.09.2007, 07.09.2007, 21.09.2007, 22.09.2007, 16.10.2007, 22.10.2007, 12.11.2007, 11.12.2007, 04.01.2008 and 06.03.2008. All these meetings were attended by me as director after my appointment on 16.08.2007. I was present in this meeting also. The minutes have been correctly recorded. All these minutes have been signed by Sh. V. Ganesan at point A, which I identify, and are now Ex PW 34/D1 to D13. In the board meeting held on 07.09.2007, a proposal was carried through to change the name of the company from Shipping Stop Dot Com (India) (P) Limited to Loop Telecom (P) limited.
About Santa Trading (P) Limited Santa Trading (P) Limited was held by Sh. I. P. Khaitan and there was another company Loop Mobile Holdings Limited. Both these companies were holding companies. As far as I recall, Santa Trading (P) Limited was holding Loop Mobile Holding Limited and this company was holding Loop CBI Vs. Ravi Kant Ruia and others Page 312 of 526 Mobile (India) Limited and this company was holding Loop Telecom Limited. I may be wrong on this point.
I have been shown board minutes of Santa Trading (P) Limited (D21), already Ex PW 21/C, and therein are minutes of the board meetings held on 18.04.2005 to 07.02.2008. I was appointed director on the board of this company in the meeting held on 02.08.2008. This meeting was chaired by Ms. Kiran Khaitan, though the minutes have been signed by me at point A. These minutes are now Ex PW 34/E and the minutes have been correctly recorded. In the meetings held on 13.08.2007, 31.08.2007, 24.11.2007 and 07.02.2008, I was present and the meetings were also presided over by me and the minutes have been correctly recorded. These minutes are now Ex PW 34/E1 to E4. All these bear my signature at point A. For holding board meeting of a company, an agenda is prepared and circulated to all concerned. I did not receive the agenda of most of the meetings attended by me as this was a matter between Mr. I. P. Khaitan and Mrs. Kiran Khaitan and me as the agenda used to be discussed amongst all three of us telephonically or when we used to meet. I used to receive instructions from Sh. I. P. Khaitan and Ms. Kiran Khaitan regarding Santa Trading (P) Limited.
Vikash Saraf and Amit Gupta did not use to give me any instruction regarding any company. For the meetings chaired by me of Loop Mobile Holding (India) Limited, instructions used to be given by Sh. I. P. Khaitan and Kiran Khaitan. Loop Telecom Limited and Loop Mobile (India) Limited were operating companies and they just followed the decisions taken by their holding companies, namely, Santa Trading (P) Limited and Loop Mobile Holding Limited......."
In her crossexamination by the learned Public CBI Vs. Ravi Kant Ruia and others Page 313 of 526 Prosecutor she denied the suggestion that BPL Communications Limited was acquired by Essar Group. She also denied that she was working mainly on the instructions of Sh. Vikash Saraf.
371. In her crossexamination by the defence, Ms. Sangeeta Lakhi reaffirmed that BPL Communications Limited and its subsidiaries were acquired by I. P. Khaitan. Her cross examination, pages 9 and 10, reads as under:
"It is correct that promoters of all four companies, that is, Loop Telecom Limited, Loop Mobile (India) Limited, Loop Mobile Holding (India) Limited and Santa Trading (P) Limited were I. P. Khaitan and Kiran Khaitan. These companies were not part of Essar group. In my examinationinchief the fact stated by me that these are part of Essar group is a mistake.
I have been shown a share purchasecumcall option agreement entered into between Asia Pacific Systems Limited (APSL) and Essar Teleholdings Limited (D98) and I was involved in the drafting of this agreement. The same is now Ex PW 34/DA. This agreement was drafted by me both on behalf of APSL and ETHL. For APSL, instructions came from Sh. I. P. Khaitan and for ETHL instructions came from Vikash Saraf. During these instructions Vikash Saraf had clearly told me that ETHL wanted to acquire such number of shares as were legally permissible. This agreement was entered into for acquiring 9.99% shares of Loop Mobile (India) Limited as it was legally permissible. Oral as well as written opinion was taken from lawyers before entering into this agreement and the agreement was entered only thereafter."
In examinationinchief of this witness, the prosecution was highly guarded. Prosecution was content with CBI Vs. Ravi Kant Ruia and others Page 314 of 526 just proving the signatures. No question was put to her as to who appointed her as director on the board of these companies. The weight of her evidence is that she was working for I. P. Khaitan and Kiran Khaitan.
372. Similarly, PW 33 Sh. Rohit Dave was also working with Rajani Associates. He had also signed share purchase agreement dated 15.07.2005 for STPL. His examinationin chief dated 19.12.2012, page 1, reads as under:
".......I have been shown a share purchase agreement dated 15.07.2005 entered into between Epsilon Advisors (P) Limited and Santa Trading (P) Limited. It bears my initial/ signature at point A on each page in the capacity of an authorized signatory for Santa Trading (P) Limited. The same is now Ex PW 33/A, running into fourteen pages (D37). I signed this document when I was in employment with M/s Rajani Associates. Such agreements are signed when shares of a company are bought and sold by a shareholder and purchased by another. In this agreement both parties/ companies have been shown as purchasers and this is a typographical mistake. On reading this document I find that Epsilon Advisors (P) Limited was seller and may be read accordingly......."
This witness deposed that he signed share purchase agreement, Ex PW 33/A, for STPL. The highly guarded attitude of the prosecution is also clear in the examinationinchief of this witness. No question was put to him as to whom STPL belonged, apprehending that if the question was put, the witness may say it belonged to I. P. Khaitan.
373. PW 52 Sh. Sandip Basu, who was Chief Executive CBI Vs. Ravi Kant Ruia and others Page 315 of 526 Officers of Loop Mobile (India) Limited, was with the BPL Group since 1997 as General Manager (Corporate Finance). In his examinationinchief dated 15.04.2013, page 2, he deposed about transfer of BPL Communications Limited to I. P. Khaitan as under:
".......BPL Communications Limited was owned by Sh. Rajeev Chandrasekhar through his various investment companies and Sh. T. P. G. Nambiar through his various investment companies and certain foreign investors. However, I do not remember the exact shareholding of each of these shareholders. Sh. Rajeev Chandrasekhar is sonin law of Sh. T. P. G. Nambiar. Since inception to 2005, the BPL Mobile group remained with Sh. Rajeev Chandrasekhar and Sh. T. P. G. Nambiar. In July 2005, the Khaitan group, owned by Sh. I. P. Khaitan, bought BPL Communications Limited from Sh. Rajeev Chandrasekhar. The Khaitan group bought the company's majority stake in 2005......."
Thus, in his examinationinchief itself he deposed that BPL companies were purchased by Sh. I. P. Khaitan.
PW 52 Sh. Sandip Basu in his further examination inchief dated 15.04.2013, page 4, deposed as under:
"......I joined Loop Mobile (India) Limited as CEO in August 2009, owned by Khaitan group of Sh. I. P. Khaitan......"
374. PW 52 Sh. Sandip Basu in his further examination inchief dated 15.04.2013, page 8, deposed about the documents sent by him to the IO about the purchase of overseas shareholdings of BPL Communications Limited as under:
CBI Vs. Ravi Kant Ruia and others Page 316 of 526".......I have been shown letter dated 10.03.2011 written by me to the IO of this case. It bears my signature at point A and is now Ex PW 52/K5 (D66). Through this letter, I had sent certified copies of the documents mentioned therein to the IO. These documents include list of directors of Capital Global Limited, Black Lion Limited, Aidtel Holdings (Mauritius) Inc., Indtel Holdings and Deccan Asian Infrastructure (Mauritius) Inc. These lists were got prepared by me as per the information received from the companies of Khaitan group, as all these companies are offshore companies. All these have been certified by me at point A on each page .
The same are now Ex PW 52/K6 to K10 (objected to) (D67)......."
Sh. Sandip Basu deposed that the documents of five companies were collected from Khaitan group.
PW 52 Sh. Sandip Basu in his further examination inchief dated 16.04.2013, pages 1 to 3, deposed about documents relating to purchase of shares of overseas companies as under:
"I have been shown a letter dated 03.03.2011, written by me to the IO of this case. It bears my signature on the second page and initials on first page at point A and the same is now Ex PW 52/O (D103). Through this letter, I had sent certified copies of documents mentioned therein to the IO, which have been certified by me at point A on each page. These documents include financial statements of Aidtel Holdings (Mauritius) Inc., for the financial year ended 31.12.2007, now Ex PW 52/O1; financial statements for the year ended 31.12.2008 of Aidtel Holdings (Mauritius) Inc., now Ex PW 52/O2; financial statements for the year ended 31.12.2009 of Aidtel Holdings (Mauritius) Inc., now CBI Vs. Ravi Kant Ruia and others Page 317 of 526 Ex PW 52/O3; and financial statements for the year ended 31.12.2010 of Aidtel Holdings (Mauritius) Inc., now Ex PW 52/O4 .
These documents also include financial statements of Inditel Holdings for the financial year ended 31.12.2007, now Ex PW 52/O5; financial statements for the year ended 31.12.2008 of Inditel Holdings, now Ex PW 52/O6; financial statements for the year ended 31.12.2009 of Inditel Holdings, now Ex PW 52/O7; and financial statements for the year ended 31.12.2010 of Inditel Holdings, now Ex PW 52/O8.
These documents also include financial statements of Deccan Asian Infrastructure (Mauritius) Inc., for the financial year ended 31.03.2007, now Ex PW 52/O9; financial statements for the year ended 31.03.2008 of Deccan Asian Infrastructure (Mauritius) Inc., now Ex PW 52/O10; financial statements for the year ended 31.03.2009 of Deccan Asian Infrastructure (Mauritius) Inc., now Ex PW 52/O11; and financial statements for the year ended 31.03.2010 of Deccan Asian Infrastructure (Mauritius) Inc., now Ex PW 52/O12.
These documents also include financial statements of Black Lion Limited for the financial year ended 31.12.2006, now Ex PW 52/O13; financial statements for the year ended 31.12.2007 of Black Lion Limited, now Ex PW 52/O14; financial statements for the year ended 31.03.2009 of Black Lion Limited, now Ex PW 52/O15. This statement is for the period from 01.01.2008 to 31.03.2009, page 4 is missing from the statement; and financial statements for the year ended 31.03.2010 of Black Lion Limited, now Ex PW 52/O16.
These documents also include financial statements of Capital Global Limited for the year ended on 31.12.2007, now Ex PW 52/O17; financial statements of Capital Global Limited for CBI Vs. Ravi Kant Ruia and others Page 318 of 526 the period 01.01.2008 to 31.03.2009, now Ex PW 52/O18; and financial statements of Capital Global Limited for the year ended on 31.03.2010, now Ex PW 52/O19.
These documents also include certificate of incumbency (it is like certificate of incorporation etc., which reflects the beneficial ownership of the company) in respect of Black Lion Limited. The same is now Ex PW 52/O20; certificate of incumbency in respect of Aidtel Holdings (Mauritius) Inc., now Ex PW 52/O21; certificate of incumbency in respect of Inditel Holdings, now Ex PW 52/O22; certificate of incumbency in respect of Deccan Asian Infrastructure (Mauritius) Inc., now Ex PW 52/O23; and certificate of incumbency in respect of Capital Global Limited, now Ex PW 52/O24......."
375. PW 52 Sh. Sandip Basu in his further examination inchief dated 16.04.2013, pages 6 to 12, deposed that he had handed over certified copies of documents relating to Shipping Stop Dot Com (India) (P) Limited to the IO. His deposition reads as under:
"I have been shown bunch of documents consisted in D7. I have flipped through these documents and I do recall that these documents were also sent by me to the IO, but I do not recall through which letter these documents were sent, however, all these documents have been certified by me on each page. These documents include first annual report (199798) of Onchannel Software (P) Limited and the same is now Ex PW 52/P4. These also include second annual report (199899) of Onchannel Software (P) Limited, now Ex PW 52/P5. These also includes third annual report (199900) of Shipping Stop Dot Com (India) (P) Limited , formerly known as Onchannel Software (P) Limited, now Ex PW 52/P6. The next document is the fourth annual CBI Vs. Ravi Kant Ruia and others Page 319 of 526 report (200001) of Shipping Stop Dot Com (India) (P) Limited , now Ex PW 52/P7. The next document is fifth annual report (200102) of Shipping Stop Dot Com (India) (P) Limited , now Ex PW 52/P8. The next document is sixth annual report (200203) of Shipping Stop Dot Com (India) (P) Limited , now Ex PW 52/P9. The next document is seventh annual report (200304) of Shipping Stop Dot Com (India) (P) Limited , now Ex PW 52/P10. The next document is eighth annual report (200405) of Shipping Stop Dot Com (India) (P) Limited , now Ex PW 52/P11 . The next document is ninth annual report (200506) of Shipping Stop Dot Com (India) (P) Limited, now Ex PW 52/P12. The next document is tenth annual report (200607) of Shipping Stop Dot Com (India) (P) Limited, now Ex PW 52/P13. These documents also include the details of share allotments/ transfer of Loop Telecom Limited since 2005. The same is now Ex PW 52/P14 (two sheets). The next document is letter dated 20.12.2005 written by Essar Investments Limited to one Ranjit Pandey requesting to file return in Form 23 in respect of Shipping Stop Dot Com (India) (P) Limited regarding change in memorandum. The same is now Ex PW52/P15. The next document is copy of receipt issued by ROC of the fees paid effecting above amendment. The same is now Ex PW52/P16. The next document is the copy of certificate issued by ROC effecting the said amendment. The same is now Ex PW52/P17. The next document is copy of resolution of the EGM dated 06.12.2005 authorizing the said amendment.
The same is now Ex PW52/P18. The next document is explanatory statement, which is part of the abovesaid resolution. The same is now Ex PW52/P19.
The next document submitted by me to the IO is the copy of resolution passed in EGM held on 16.08.2007 for alteration in memorandum of association regarding object clause. The same is now CBI Vs. Ravi Kant Ruia and others Page 320 of 526 Ex PW52/P20. The next document is copy of resolution passed in EGM dated 16.08.2007 for amendment in the article authorizing the company to apply for UAS licence etc. The same is now Ex PW52/P21. The next document is copy of Form 23 uploaded on the website of ROC regarding the said alteration in memorandum of association. The same is now Ex PW52/P22 (two sheets). The next document is copy of receipt of fees paid to ROC regarding the said amendment. The same is now Ex PW52/P23. The next document is copy of special resolution passed in EGM dated 16.08.2007 for issue an allotment of shares on preference basis of Shipping Stop Dot Com (India) (P) Limited. The same is now Ex PW 52/P24. The next document is explanatory statement attached with the said resolution. The same is now Ex PW 52/P25 (two sheets). The next document is certified copy of special resolution passed in EGM dated 16.08.2007 of Shipping Stop Dot Com (India) (P) Limited for alteration in amendment of memorandum of association of object clause to carry out mobility services as per UAS licencing conditions. The same is now Ex PW 52/P26. The next document is resolution of EGM dated 16.08.2007 of Shipping Stop Dot Com (India) (P) Limited for increase in authorized capital from 5.2 crore to 131 crore. The same is now Ex PW 52/P27.
The next document is explanatory statement attached with the said resolution. The same is now Ex PW 52/P28 . The next documents are copies of minutes of board meetings of Shipping Stop Dot Com (India) (P) Limited of various dates from pages 1 to 54 and also minutes of AGMs and EGMs in five and twelve sheets respectively. These certified copies were also given by me to the IO alongwith aforesaid documents but their originals were also supplied to the IO and these are available in D5, already Ex PW34/D, D3, already Ex PW52/G, D11, already Ex PW52/C and D13, already Ex PW52/P2. The copies are now CBI Vs. Ravi Kant Ruia and others Page 321 of 526 collectively Ex PW52/P29.
The next document is the copy of resolution passed in EGM of Onchannel Software Private Limited held on 01.05.2000 regarding increase in authorized share capital. The same is now Ex PW52/P30. The next document is copy of certificate issued by ROC in respect of said amendment. The same is now Ex PW52/P31. The next document is copy of receipt of the fees paid to ROC in this respect. The same is now Ex PW52/P32. The next document is copy of letter dated 01.11.2006 written by Shipping Stop Dot Com (India) (P) Limited to ROC, Delhi and Haryana regarding increase in authorized share capital. The same is now Ex PW52/P33. The next document is copy of memorandum of association, however, this is not amended as the company cannot act unless the same is not approved by the ROC. (Objected to by Sh. S. V. Raju, learned Sr. Advocate that this is an opinion.) Again said the legal opinion is that the effective date of amendment is the date on which resolution is passed by shareholders and this memorandum is amended memorandum reflecting the increased authorized capital. The same is now Ex PW52/P34. The next document is Form 5 regarding the above amendment, that is, increase in authorized capital, which was filed with ROC. The same is now Ex PW52/P35. The next document is copy of fees paid to ROC regarding the said amendment. The same is now Ex PW52/P36. The next document is copy of articles of association of Shipping Stop Dot Com (India) (P) Limited. The same is now Ex PW52/P37.
The next document is the Form 5 submitted to ROC in respect of amendment of authorized capital from Rs. 5.2 crore to Rs. 131 crore as referred above. The same is now Ex PW 52/P38. The copy of receipt issued by ROC regarding the payment of fees in respect of the said amendment is Ex PW 52/P39. The next document is copy of Form 5 regarding increase in authorized capital of Loop Telecom (P) CBI Vs. Ravi Kant Ruia and others Page 322 of 526 Limited from Rs. 131 crore to Rs. 310 crore, submitted to ROC. The same is now Ex PW 52/P40.
Attached with this form is the copy of memorandum of association reflecting the abovesaid increase in authorized share capital. The same is now Ex PW th 52/P41. The next document is 12 annual report (200506) of BPL Communications Limited. The same is now Ex PW 52/P42. The next document is shareholding status of Vodafone Essar Limited as on 20.12.2010. The same is now Ex PW 52/P43. The th next document is 29 annual report (200506) of Essar Investments Limited. The same is now Ex PW th 52/P44. The next document is 13 annual report (200607) of BPL Communications Limited. The same is now Ex PW 52/P45. The next document is th 11 annual report (200607) of Essar Telecom Holdings Overseas (P) Limited. The same is now Ex th PW 52/P46. The next document is notice for 12 annual general meeting of STPL. The same is now Ex PW 52/P47, attached with this notice is director's report and audited financials of STPL........"
Prosecution was content with just getting the documents exhibited. Not a single question was put about the contents of any document. It is doubtful if the facts mentioned in these documents stand proved by mere exhibition, though the case of the defence is that facts remain unproved.
This witness proved the annual reports of STPL beginning from first annual report Ex PW 52/P4 to thirteenth annual report Ex PW 52/P45. All these reports were prepared by M/s A. P. Rajagopalan and Co. of PW 15 Sh. R. Kirthivasan. Notice Ex PW 52/P47, also prepared by M/s A. P. Rajagopalan and Co., shows a debt of Rs. 1592,59,63,000/ on STPL as on 31.03.2007. This also shows that BPL Communications Limited CBI Vs. Ravi Kant Ruia and others Page 323 of 526 and BPL Mobile Communication Limited are its subsidiary companies. However, these documents were not put to PW 15 Sh. R. Kirthivasan. No question was put about the contents of these documents.
376. PW 52 Sh. Sandip Basu in his further examination inchief dated 16.04.2013, pages 14 to 16, deposed about documents relating to overseas companies of I. P. Khaitan as under:
".......I have been shown letter dated 24.02.2011 written by me to the IO of this case. It bears my signature at point A and the same is now Ex PW 52/R8. I had sent certified copies of documents mentioned therein to the IO of this case. These documents include copy of certificate of incorporation of Capital Global Limited, earlier known as Catquip Limited. The same is now Ex PW 52/R9. The certificate of incorporation issued to Catquip Limited is also attache with this certificate. The next document is certificate of incorporation of Black Lion Limited. The same is now Ex PW 52/R10. The next document sent through this letter is certificate of incorporation of Inditel Holdings. The same is now Ex PW 52/R11. The next document is certificate of incorporation of Deccan Asian Infrastructure (Mauritius) Inc., earlier known as BPL Asian Infrastructure (Mauritius) Inc. The same is now Ex PW 52/R12, the certificate of incorporation issued in the name of BPL Asian Infrastructure (Mauritius) Inc. is also attached with this certificate. The next document sent through this letter is certificate of incorporation of Aidtel Holdings (Mauritius) Inc. The same is now Ex PW 52/R13. The next document is copy of certificate of incorporation in the name of Santa Trading (P) Limited by changing the name of Atul Bhagwat Trading (P) Limited. The same is now Ex PW CBI Vs. Ravi Kant Ruia and others Page 324 of 526 52/R14. The next document sent through this letter is fresh certificate of incorporation issued in favour of Loop Mobile Holdings India Limited by changing the name of BPL Communications Limited. The same is now Ex PW 52/R15. The next document sent through this letter is fresh certificate of incorporation issued in favour of Loop Mobile (India) Limited by changing the name of BPL Mobile Communication Limited. The same is now Ex PW 52/R16. The next document is certificate of incorporation in the name of BPL Systems and Projects Limited by changing the name of Power Systems and Projects Limited. The same is now Ex PW 52/R17. A fresh certificate issued in the name of BPL Systems and Projects Limited is also attached with this certificate. The certificate issued in the name of Power Systems and Projects Limited is also attached with certificate Ex PW 52/R17. And the next document is fresh certificate of incorporation issued in favour of Loop Telecom Limited by changing the name of Loop Telecom (P) Limited.
The same is now Ex PW 52/R18.
I have been shown another letter dated 24.02.2011 written by me to the IO of this case. It bears my signature at point A and the same is now Ex PW 52/R19. I had sent documents mentioned therein to the IO of this case. These documents include shareholding structure of Loop Telecom (P) Limited as on 03.09.2007, as certified by Deloitte Haskins & Sells, chartered accountants. The same is now Ex PW 52/R20. Again said, this document was not sent with this letter and was sent separately. The documents sent through letter 52/R19 include list of shareholders as on 03.09.2007 of Capital Global Limited. The same is now Ex PW 52/R21. Attached with this list of shareholders is a letter dated 17.02.2011 issued by International Management (Mauritius) Limited written to Capital Global Limited. The next document sent through letter Ex PW 52/R19 is the list of shareholders as on CBI Vs. Ravi Kant Ruia and others Page 325 of 526 03.09.2007 of Black Lion Limited. The same is now Ex PW 52/R22. Attached with this list of shareholders is a letter dated 17.02.2011 issued by International Management (Mauritius) Limited written to Black Lion Limited. The next document is list of shareholders as on 03.09.2007 of Inditel Holdings. The same is now Ex PW 52/R23. The next document is the list of shareholders as on 03.09.2007 on Deccan Asian Infrastructure (Mauritius) Inc. The same is now Ex PW 52/R24. The next document is list of shareholders as on 03.09.2007 of Aidtel Holdings (Mauritius) Inc. The same is now Ex PW 52/R25......"
Prosecution did not put a single question about the contents and nature of these documents.
377. PW 52 Sh. Sandip Basu in his further examination inchief dated 25.04.2013, pages 3 and 4, deposed about the purchase of BPL Communications Limited by I. P. Khaitan as under:
"Question: You had deposed before this Court that BPL Communications Limited was acquired by I.P. Khaitan Group in July 2005. Please tell this Court, if this was acquired 100% by I.P. Khaitan Group? Answer: In the board meeting of BPL Mobile Communication Limited, it was discussed that the Khaitan Group owned by Sh. I.P. Khaitan had bought over BPL Communications Limited and hence, they were beneficial owners of these two subsidiaries companies also. However, I am unable to recall the exact percentage of equity shares bought by the Khaitan Group but I do recall that the holding company was purchased by them.
Question: You had stated before this Court that Khaitan Group led by Sh. I.P. Khaitan had entered into two agreements with HEL for sale of BPL Mobile Communication Limited and BPL Mobile Cellular CBI Vs. Ravi Kant Ruia and others Page 326 of 526 Limited. Were these agreements in fact executed/implemented or not?
Answer: The agreement for the sale of BPL Mobile Cellular Limited pertained to the service areas of Maharashtra & Goa, Tamil Nadu & Pondicherry and Kerala. As HEL was not present in these circles this agreement was implemented and closed. The agreement for the sale of BPL Mobile Communication Limited was subject to DoT's approval as HEL already held the licence for Mumbai service area. HEL obtained the approval of DoT beyond the agreed time frames as stipulated in the agreement and hence, this agreement was not implemented.
The Loop Mobile (India) Limited still operates its licence in Mumbai service area and is owned by I.P. Khaitan Group. There was a clause in the agreement where any dispute had to be referred to an arbitration. There were arbitration proceedings in this matter and the same have since been settled.
I have been shown letter dated 09.06.2011 written by I.P. Khaitan Group to the IO of this case (D47). It bears the signature of Sh. I.P. Khaitan at point A and is now Ex PW52/S3. The documents mentioned in the letter were submitted to the CBI through my Delhi office. These documents pertain to Offshore companies of Sh. I.P. Khaitan. However, these documents were submitted to the CBI to the aforesaid letter. These documents are equity share call agreement dated 12.04.2005, already Ex PW40/P (D48), share purchase agreement dated 20.12.2004, now Ex PW52/S4 (D49), share purchase agreement dated 15.03.2006, now Ex PW52/S5 (D50) and another share purchase agreement dated 15.03.2006, now Ex PW52/S6 (D51)........"
Thus, the witness again categorically affirmed in examinationinchief itself that BPL Communications Limited CBI Vs. Ravi Kant Ruia and others Page 327 of 526 was acquired by Sh. I. P. Khaitan.
PW 52 Sh. Sandip Basu in his further examination inchief dated 25.04.2013, pages 6 to 8, deposed about payment of entry fee by Loop Telecom Limited as under:
".......To my knowledge, Loop Telecom Limited obtained UAS licences for twenty one service areas. As far as my recollection goes, the company paid Rs. 1454 crore as entry fee. I do not remember orally as to where the money was arranged, however, if documents are shown to me, I may be able to recollect the same.
I have seen document, already Ex PW52/M, PW42/C, PW52/M1 and PW42/DA and as per these documents, the money was arranged (i) an advance of Rs.700 crore from Essar Telecom Infrastructure Private Limited (ETIPL) under a contract to provide passive infrastructure and related operations and maintenance services, (ii) term loan of Rs.725 crore from State Bank of India and (iii) an advance of Rs. 175 crore towards equity shares from ETHL Global Capital Limited.
Question: Who provided the guarantee for the term loan of Rs.725 crore, as referred above, as per document Ex PW52/M1?
Answer: I have seen the document and as per this, the corporate guarantee of Essar Power Limited and Essar Shipping Limited, was to be provided in a form acceptable to the bank and the same was accordingly given. I have said so on the basis of this document alone.
Question: Why ETIPL gave the aforesaid amount of Rs.700 crore, when in fact it was to receive payment as rental?
Answer: It was usual business practice to give refundable advances in exchange of exclusivity of tower rollout contracts, which (exclusivity) ETIPL got from Loop Telecom Limited. I say this that when I was MD of Xcel Telecom Private Limited, I had CBI Vs. Ravi Kant Ruia and others Page 328 of 526 approached several companies for this purpose including Loop Telecom Limited, though, this company was not in a position to give any advance.
I do not know, if ETIPL concluded similar agreement with any other party or not. LTL was not in a position to enter into such agreement as it had given exclusivity to ETIPL. However, this agreement was not implemented as LTL failed to obtain spectrum within the agreed upon time frame. No such agreement was executed by LTL after it failed to implement this agreement with ETIPL. However, similar agreements were executed between the parties but without any exclusivity and advance......."
Here, the witness explained the sources from where money was raised for making payment of entry fee by Loop Telecom Limited. He reaffirmed that the contract with ETIPL was as per usual business practice. Thus, Sh. Sandip Basu, in his examinationinchief itself, deposed that BPL companies were purchased by Sh. I. P. Khaitan.
378. PW 52 Sh. Sandip Basu in his crossexamination dated 26.04.2013, pages 1 to 3, deposed about purchase of 26% equity of BPL Communications Limited by Khaitan Group and the investment by Khaitan Group in his company as under:
".......It is correct that 26% equity shares of BPL Mobile Communication Limited were held by France Telecom through an SPV, which were purchased by Asia Pacific Systems Limited in 2004. This company was a Khaitan Group company. It is correct that at the time of this purchase, I was CEO of BPL Mobile Communication Limited. It is correct that after the purchase of this equity, Asia Pacific Systems Limited requested that Sh. Vikash Saraf and Sh. Prem Rajani be appointed on the board of BPL Mobile CBI Vs. Ravi Kant Ruia and others Page 329 of 526 Communication Limited, as France Telecom had right to appoint two directors on the board of BPL Mobile Communication Limited. This request of APSL was conceded and aforesaid two persons were appointed on the board of BPL Mobile Communication Limited. Since, APSL is an offshore company of Khaitan Group, the figure for which the aforesaid equity shares were purchased, were/are not available with us and as such, I cannot specify this figure. It is correct that I have no personal knowledge about the whole transaction including the figure of 20 million USD.
Alongwith letter already Ex PW52/P3, I had sent three documents already Ex PW52/P43, Ex PW52/P44 and Ex PW 52/P46 (D7) and these documents were sent to me by my team, from Mumbai, when I was in Delhi on the direction of CBI in the month of February 2011. I had also asked my team to contact Essar officials to get these documents. It is correct that at the time of submission these documents were not certified. It is correct that somewhere in September 2011 IO asked me to come with my stamp and to certify these documents and I accordingly certified these documents. I certified all the documents submitted by me in the CBI office itself. It is correct that at that time, originals were not available, as I had not submitted the same.
It is correct that on showcause notice, already Ex PW 52/S7, no action has been taken by DoT, till date. There is a certificate dated 14.02.2011 annexed with Ex PW 52/P3.
This certificate is a certified copy, certified by me and the same is now Ex PW 52/DD (D7). This certificate was obtained by me from A.P. Rajgopalan & Company, chartered accountants, when I was CEO of Loop Telecom Limited. It is correct that for preparation of this certificate, I had provided all the statutory records to the chartered accountants. It is correct that the details of investments as mentioned therein, are CBI Vs. Ravi Kant Ruia and others Page 330 of 526 correct as they are as per the records. As per this certificate, the net amount of investments by Khaitan Group in Essar Group as on 03.09.2007 was Rs. 1358.41 crore.
Certificate Ex PW52/DA1 was also obtained by me from the chartered accountants mentioned therein, when I was CEO of Loop Telecom Limited. It is correct that for the purpose of this certificate also, I provided all statutory records to the chartered accountants. It is correct that this certificate correctly shows the shareholding of Loop Telecom Limited as on 03.09.2007. It is correct that as per this certificate as on 03.09.2007, 97.85% shares of Loop Telecom Limited were directly or indirectly held by Sh. I.P. Khaitan and Ms. Kiran Khaitan. It is correct that since 03.09.2007 to the issuance of twenty one UAS licences to LTL, there was no change in its shareholding pattern.
I am aware about Clause 8 of UASL Guidelines pertaining to substantial equity clause. As per the statutory records and shareholding pattern, LTL was not in breach of this clause as on 03.09.2007........"
Thus, he deposed that Sh. I. P. Khaitan owned Loop Telecom Limited.
He also deposed that Loop Telecom Limited was not in violation of Clause 8 on the date of filing of applications, that is, on 03.09.2007.
379. PW 52 Sh. Sandip Basu in his further cross examination dated 26.04.2013, pages 4 to 6, deposed about the money invested by Capital Global Limited and also about the overseas companies of I. P. Khaitan as under:
".......I have been shown statement of account of Loop Telecom Limited in Royal Bank of Scotland (now ABN Amro Bank), already Ex PW 24/C and as CBI Vs. Ravi Kant Ruia and others Page 331 of 526 per this statement, money to the tune of Rs. 174,11,90,512/ was received from Capital Global Limited at point A on 27.03.2008. Similarly, an amount of Rs.88 lacs was received on 28.03.2008 from BPL Communications Limited as mentioned at point A1. Further more, amounts of Rs.88 lacs and Rs.173.24 crore respectively were paid to ETHL Global Capital Limited on 28.03.2008 as mentioned at point B and C. It is correct that BPL Communications Limited and Capital Global Limited were owned by Sh. I.P. Khaitan. Letter Ex PW4 2/DJ was written by Loop Telecom Private Limited to ETHL Global Capital Limited asking for some time to return the money. Similarly, letter Ex PW 42/DK dated 28.03.2008 was written by LTPL to ETHL Global Capital Limited returning the money mentioned therein, which was obtained by it as mentioned in the statement of account, already Ex PW24/C. I am saying so only on reading the document, as I was not CEO of LTL at that time.
To my knowledge based on some documents before this Court, Gypsy Rover and Black Lion Limited are overseas companies of Sh. I.P. Khaitan. I have been shown twelve original foreign inward remittance certificates issued by ING Bank, thereby money was sent by Khaitan Holding Mauritius Limited and Kaif Investments Limited, both I.P. Khaitan Overseas companies, to Loop Telecom Limited, during the period when I was CEO. These are correct and certified copies are now Ex PW 52/DG1 to PW52/DG12. I have also been shown two more such foreign inward remittance certificates of ABN Amro Bank and Standard Chartered Bank and to my knowledge, they are also correct, though, I was not CEO at that time and the same are now Ex PW 52/DG13 and PW52/DG14 (original seen and returned). A CEO of the company is required to see the entire affairs of a company."
Thus, Sh. Sandip Basu deposed that BPL CBI Vs. Ravi Kant Ruia and others Page 332 of 526 Communications Limited and Capital Global Limited were companies of Sh. I. P. Khaitan.
380. He also deposed that Gypsy Rover and Black Lion Limited are overseas companies of I. P. Khaitan. D129, Ex PW 54/D1, contains the documents received from Mauritius and proved by PW 54 Sh. M. Ganapathi, the then High Commissioner of India to Mauritius. These documents contain the details of the companies of I. P. Khaitan, pages 260 and 261. These documents show that Capital Global Limited, Khaitan Holdings (Mauritius) Limited, Kaif Investment Limited, Palab Investment Limited, Black Lion Limited, Deccan Asian Infra (Mauritius) Inc., Aidtel Holdings (Mauritius) Inc. and Inditel Holdings, all incorporated in Mauritius, are companies of I. P. Khaitan. These documents also show purchase of shares of BPL Communications Limited held by overseas companies like Aidtel, Deccan Asian Infra (Mauritius) Inc. and Inditel by Capital Global Limited, a company of I. P. Khaitan. As per document D133, Ex PW 54/D5, page 8, the shares of CDC Financial Services and South Asia Regional Fund were also purchased by Black Lion Limited. As per document, Ex PW 54/D2, page 7, Khaitan Holdings (Mauritius) Limited was 100% holding Palab Investment Limited and Kaif Investment Limited, Inditel, Aidtel, Deccan, Black Lion were companies of I. P. Khaitan, which were holding Capital Global Limited along with Kiran Khaitan.
Similarly, document, Ex PW 40/DC, page 65 (D133), are minutes of board meeting of Black Lion Limited CBI Vs. Ravi Kant Ruia and others Page 333 of 526 held on 08.04.2005. These minutes mention that due to differences and disputes, Sh. Rajiv Chandrasekhar and others wanted to sell their equity in BPL Communications Limited. Company expressed its desire to purchase equity shares and debentures in BPL held by CDC Financial Services and South Asia Regional Fund. These minutes indicate that Sh. I. P. Khaitan had an interest in buying shares of BPL at least from 08.04.2005.
381. PW 52 Sh. Sandip Basu in his further cross examination dated 26.04.2013, pages 6 to 9, deposed about purchase of BPL Communications Limited by I. P. Khaitan. He also deposed that he was reporting to I. P. Khaitan. His deposition reads as under:
"It is correct that from 2003 to 2005, I was CEO of BPL Mobile Communication Limited. It is correct that at that time, Sh. S. Subramaniam was CFO of this company. As such, he was senior member of management team of the company. It is correct that at that time, there was serious dispute between Sh. T.P.G. Nambiar and Sh. Rajiv Chandrashekhar. It is also correct that there were disputes between Sh. Rajiv Chandrashekhar as well as foreign shareholders of BPL Communications Limited, the holding company. It is also correct that at that time, BPL Communications Limited and its two subsidiaries were facing serious financial crisis. It is also correct that there was default on loan from ICICI Bank, obtained by BPL Communications Limited. It is correct that I was involved in discussion with ICICI Bank regarding restructuring the loan obtained from it. It is correct that ICICI Bank was exerting pressure on Sh. Rajiv Chandrashekhar to repay the loan or to sell his shareholding. It is correct that Sh. Rajiv CBI Vs. Ravi Kant Ruia and others Page 334 of 526 Chandrashekhar appointed M/s J.M. Morgan Stanley to conduct negotiation with different parties regarding sale of shares of BPL Communications Limited. It is correct that I was aware in 2005, at the time of acquisition, that Sh. I.P. Khaitan had purchased BPL Communications Limited. It is correct that Sh. S. Subramaniam was reporting to me and I used to appraised his work. It is correct that when I came to know that Sh. I.P. Khaitan had purchased BPL Communications Limited, I informed other senior members, including Sh. S. Subramaniam.
It is correct that at the time of acquisition of BPL Mobile Group companies by Sh. I.P. Khaitan, I had a meeting with him at Mumbai. It is correct that he also met other senior members of the management of these companies. It is correct that he also told us that he is the new owner of these companies. It is also correct that he told us that he was going to sell the two operating companies, that is, BPL Mobile Communication Limited and BPL Mobile Cellular Limited to HEL. It is correct that since HEL was already having its set up in Mumbai including a CEO, I felt that I had no future in this company. It is correct that for this reason, I left the company in August 2005.
I have been shown minute book of BPL Mobile Communication Limited, D16, already Ex PW34/B and therein my attention has been invited to the minutes of board meeting held on 23.02.2005, wherein, I was present as an invitee. These minutes have been signed by Sh. B.K. Singhal, whose signature I identify at point A and these minutes are now Ex PW52/DH. In this meeting, Sh. S. Subramaniam was also present as an invitee. It is correct that in this meeting, Chairman informed that APSL and ETHL had also become shareholders in this company. It is correct that during discussion, the board was informed that APSL was a Khaitan Group Company and ETHL was Essar Group Company. In CBI Vs. Ravi Kant Ruia and others Page 335 of 526 the meeting dated 21.07.2005 minutes of which are already Ex PW52/DE, I was present as an invitee. It is correct that in this meeting, board was informed that STPL had purchased 64% shares of BPL Communications Limited. It is correct that it was also discussed in the board that STPL was a Khaitan Group company.
It is correct that LTL started using the business centre in Essar Techno Park in Kurla Complex, Mumbai sometime in 2009. It is correct that agreement, already Ex PW46/DB, was executed between Essar Information Technology Limited and M/s Loop Telecom Private Limited for use of the aforesaid office and was actually paying the fee mentioned in the agreement for use of the office.
It is correct that before I joined LMIL and LTL in August 2009, I had discussion with Sh. I. P. Khaitan and informed him about my willingness to join his companies. It is correct that on the request of Sh. I.P. Khaitan, the board of the two companies appointed me, their CEO. Since then, I have been regularly reporting to Sh. I.P. Khaitan. On some occasions, Nalin Khaitan, his son, also used to be present with Sh. I. P. Khaitan. He was also taking active interest in the affairs of the companies. It is correct that during my tenure as CEO, neither Sh. Ravi Kant Ruia nor Sh. Anshuman Ruia took part in the activities of two companies. It is also correct that since then, Sh. Vikash Saraf was also not taking part in the activities of two companies. It is correct that all the strategic decisions of the Loop companies were being taken Sh. I. P. Khaitan, since my joining. It is correct that Ms. Kiran Khaitan was not taking any active interest in the affairs of two companies."
Perusal of evidence of Sh. Sandip Basu reveals that it is full of references to Sh. I. P. Khaitan and his buying the BPL companies.
CBI Vs. Ravi Kant Ruia and others Page 336 of 526Thus, the weight of the evidence of PW 52 Sh. Sandip Basu also is that I. P. Khaitan was the buyer of BPL Group of Companies. Not only this, it is supported by documents also. Thus, it is not a mere oral assertion of Sh. Sandip Basu.
382. PW 43 Sh. Narottam B. Vyas was a Director in ETHL and several other companies of Essar Group. In his examination inchief dated 31.01.2013, pages 3 to 11, he deposed about the acquisition of investment in BPL Group by Essar and its assignment and sale to STPL in quite a detail. His deposition reads as under:
About acquisition of stake of Sh. Rajeev Chandrasekhar.
".......Through this memo, a register of board minutes of ETHL is shown to have been seized by the CBI. The said register D23, already Ex PW 18/B, is shown to me and it is the same register containing the minutes of board meetings from 04.06.2004 to 02.03.2009.
On looking at the register I find that I attended the board meetings of ETHL held on 04.06.2004, 28.06.2004, 19.07.2004, 28.07.2004, 15.10.2004, 25.10.2004, 28.01.2005, 18.03.2005, 28.04.2005, 08.06.2005, 13.07.2005, 29.07.2005, 31.08.2005, 13.09.2005, 26.10.2005, 24.11.2005, 14.12.2005, 02.01.2006, 14.01.2006, 31.01.2006, 24.02.2006, 31.03.2006, 29.04.2006, 12.06.2006, 28.06.2006, 19.07.2006, 09.08.2006, 20.09.2006, 18.10.2006, 16.10.2006, 20.12.2006, 20.01.2007, 22.02.2007, 07.03.2007, 29.05.2007, 13.07.2007, 07.08.2007, 16.08.2007, 01.09.2007, 18.09.2007, 20.12.2007, 28.12.2007, 25.01.2008, 18.02.2008, 19.03.2008, 28.03.2008, 09.04.2008, 30.04.2008, 31.05.2008, 11.08.2008, 01.10.2008, 15.10.2008, 26.02.2009 and 02.03.2009. All these minutes have been signed CBI Vs. Ravi Kant Ruia and others Page 337 of 526 by Sh. Vikash saraf at point A, which I identify, and these minutes are now Ex PW 43/A1 to 43/A48, other than minutes already Ex PW 40/DA, 18/C, 18/C1, 18/C2, 18/C3 and 18/D, which have also been signed by Sh. Vikash Saraf.
I have been shown board minutes dated 15.10.2004, already Ex PW 40/DA, which meeting was also attended by me. In these minutes there is a reference to Khaitan group, owned by Sh. I. P. Khaitan and I came to know about this group only during my presence at this meeting. However, as per identity of Sh. I. P. Khaitan is concerned, I knew that he was brotherinlaw of Ruias. Ruias are promoter directors of Essar group including Sh. Shashi Ruia, Sh. Ravi Ruia, Sh. Prashant Ruia and Sh. Anshuman Ruia. I can identify Sh. I. P. Khaitan and all the four Ruias mentioned above. Sh. I. P. Khaitan is present in Court today and I identify him. I also identify Ms. Kiran Khaitan, who is present in Court, who is sister of Ruias and married to Sh. I. P. Khaitan. Court Observation: Ravi Kant Ruia and Anshuman Ruia are exempted from personal appearance in Court for today, subject to the condition that their identity shall not be disputed.
The entire information minuted in these minutes Ex PW 40/DA came from the chairman of the meeting, that is, Sh. Vikash Saraf. However, decision is always taken by the board.
The information minuted in minutes dated 28.01.2005, Ex PW 43/A6, came from chairman of the meeting. The agenda was to enter into agreements with the four companies mentioned in the resolution for acquisition of rights/ options for shares in BPL Communications Limited, from companies, namely, Tayana, Vectra, Coimbatore Cablenet and Epsilon Advisors. There was a specific reference in the agenda and the minutes that the company shall have rights to assign all its rights under these agreements to any other person. This right was reserved to the company and it was as per CBI Vs. Ravi Kant Ruia and others Page 338 of 526 the understanding arrived at between Essar group and Khaitan group and minuted in the minutes of board meeting of 28.01.2005, Ex PW 43/A6. This meeting was chaired by Sh. Vikash Saraf.
About debt instruments I have been shown board minutes of meeting held on 18.03.2005, Ex PW 43/A7. I was present in this meeting and the meeting was presided over by Sh. Vikash Saraf. In this meeting, Sh. Vikash Saraf proposed that company was to acquire debt instruments in BPL Communications Limited from ICICI Bank for value not exceeding Rs. 410 crore, company to acquire equity stake in BPL Communications Limited from ICICI Trusteeship Services Limited for value not exceeding Rs. 80 crore and company to acquire 1,48,70,000 preference shares of BPL Communications Limited from Black Lion Limited. These agenda items were discussed and approved by the board. The minutes have been signed by Sh. Vikash Saraf.
I have been shown board minutes dated 28.04.2005, Ex PW 43/A8. I alongwith Sh. Vikash Saraf was present in this meeting. There was a share purchasecumcall option agreement dated 18.11.2004 entered with Asia Pacific Systems Limited, Mauritius. A resolution was passed in this meeting asking Asia Pacific Systems Limited to extend the call option month period from six months to nine months. In the same meeting, Sh. Vikash Saraf or Sh. Girish Sathe was authorized to sign papers, documents in this regard on behalf of company. The minutes have been signed by Sh. Vikash Saraf.
About 9.9% equity of BPL Communications Limited I have also been shown minutes of board meeting held on 08.06.2005, Ex PW 43/A9, in which Sh. Vikash Saraf and myself were present. It CBI Vs. Ravi Kant Ruia and others Page 339 of 526 was a proposal from Sh. Vikash Saraf that company may acquire stakes in BPL Communications Limited, BPL Mobile Communications Limited and BPL Mobile Cellular Limited, to the extent mentioned in these minutes. The proposal was approved by the board and it was further resolved that Sh. Vikash Saraf, Sh. N. B. Vyas (myself) and Sh. Girish Sathe were authorized to negotiate and finalize the terms and conditions for the said acquisition and to sign share purchase agreements and papers necessary. I did not do anything in this regard pursuant to this resolution.
I have been shown minutes of board meeting held on 31.08.2005, Ex PW 43/A12, which was also attended by me and was chaired by Sh. Vikash Saraf. It was a proposal before the the board that the company should sell its representing 9.99% of the capital in BPL Mobile Communications Limited to Hutchison Essar Limited and this proposal was approved and Sh. Vikash Saraf was authorized to negotiate and finalize the terms and conditions. The proposal had come from Sh. Vikash Saraf and the minutes have been signed by him.
About assignment of share purchase agreements I have been shown minutes of board meeting held on 13.09.2005, Ex PW 43/A13, which was also attended by me and was chaired by Sh. Vikash Saraf. In this meeting, it was, inter alia, resolved that company to approve the assignment made of its rights under the share purchase agreement dated 16.03.2005 entered by the company for the purchase of shares in BPL Communications Limited, as per details mentioned therein, and this proposal, that is, ratification of assignment of rights under share purchase agreement, came from Vikash Saraf. The minutes have been signed by Sh. Vikash Saraf.
About MOCD I have been shown minutes of board meeting CBI Vs. Ravi Kant Ruia and others Page 340 of 526 held on 26.10.2005, Ex PW 43/A14, which was also attended by me and was chaired by Sh. Vikash Saraf. In this meeting it was proposed by Vikash Saraf and was also resolved that consent of the company be and hereby given for sale of 25 crore MOCD (Multi Option Convertible Debentures) of Rs. 100 of Essar Investments Limited to BPL Communications Limited at an aggregate price not less than Rs. 2500 crore and Sh. Vikash Saraf and/or Sh. N. B. Vyas (myself), directors of the company, and Sh. Girish K. Sathe, company secretary be and hereby are severally authorized to do or cause to be done all such acts, deeds and things as may be necessary to give effect to this resolution. I did not do anything pursuant to this resolution. The minutes have been signed by Sh. Vikash Saraf.
About partnership firm There was a partnership firm by the name of Essar Teleholdings. Initially Essar Teleholdings Limited and Karthik Financial Services Limited were its partners. I have been shown minutes of board meeting held on 02.01.2006, Ex PW 43/A17, which was attended by me and chaired by Vikash Saraf. In this meeting, it was proposed and resolved that this firm be reconstituted by admission of BPL Communications and Essar Investments Limited as partners, in addition to the existing partners and it was also approved to change the name of the firm from M/s Essar Teleholdings to M/s BPL Communications. It was also resolved that company should contribute to the capital of the partnership by sale of 86,05,304 equity shares held in BPL Mobile Communications Limited at a total consideration equal to cost in the books. It was also resolved that company do sell 24,21,00,000 MOCD of Rs. 100 each in Essar Investments Limited to BPL Communications Limited at Rs. 100 per MOCD. The minutes have been signed by Sh. Vikash Saraf.
I have been shown minutes of board meeting CBI Vs. Ravi Kant Ruia and others Page 341 of 526 held on 14.01.2006, Ex PW 43/A18, which was attended by me and chaired by Sh. Vikash Saraf. In this meeting, it was proposed and resolved that in respect of this partnership firm, that is, BPL Communications (formerly Essar Teleholdings), the profit and loss sharing ratio shall be: BPL Communications Limited 90%, Essar Teleholdings Limited 5%, Essar Investments Limited 3% and Karthik Financial Services Limited 2%. A draft deed of admission was also discussed and approved by the board. These minutes have also been signed by Sh. Vikash Saraf.
I have also been shown minutes of board meeting held on 20.09.2006, Ex PW 43/A25, wherein I was also present and the meeting was chaired by Sh. Vikash Saraf. In this meeting, it was proposed and resolved that the company, that is, ETHL, should resign as partner from partnership firm M/s BPL Communications. The deed of retirement was also discussed and approved by the board. These minutes have also been signed by Sh. Vikash Saraf.
About sale of investment by ETHL I have also been shown minutes of board meeting held on 16.12.2006, Ex PW 18/C2, wherein I was also present alongwith Sh. Anand Sonthalia. The meeting was presided over by me. In this meeting, it was proposed and resolved that company should sell the investments held by it in BPL Communications Limited to one or more persons at a price consideration of not less than Rs. 678,42,60,000/. It was also resolved to invest up to Rs. 678,42,60,000/ into nonconvertible debentures of Rs. 100 each of Santa Trading (P) Limited by way of subscription. The proposal on this point was given to me by company secretary Sh. Girish Sathe alongwith agenda papers. However, the minutes have been signed by Vikash Saraf as chairman. In view of the fact that he was chairman, Vikash Saraf CBI Vs. Ravi Kant Ruia and others Page 342 of 526 was aware of the proposal passed in this meeting.
I have also been shown minutes of board meeting held on 07.03.2007, Ex PW 43/A28, wherein I was also present apart from Vikash Saraf and Amit Gupta. The meeting was chaired by Sh. Vikash Saraf. In this meeting it was proposed and resolved that company should sell 9,32,42,600 non convertible debentures of Santa Trading (P) Limited to Essar Investments Limited at such price consideration as may be mutually agreed. I do not remember if I did anything in this regard pursuant to this resolution.
About Shipping Stop Dot Com (India) (P) Limited I was authorized signatory for forty to fifty companies of Essar group for opening and operating bank accounts. I was also authorized signatory for two companies of Loop group, namely, Loop Telecom (P) Limited and Loop Mobile Holding Limited, for a brief period, for operating bank accounts. I became authorized signatory for these two companies on the asking of Vikash Saraf. Loop Telecom (P) limited was earlier an Essar group company by the name Shipping Stop Dot Com (India) (P) Limited. I was authorized signatory of this company also from the time it was an Essar group company and continued to be its authorized signatory even after it became Loop Telecom (P) Limited, on the asking of Vikash Saraf.
About funding As per my knowledge, Essar group had funded a sum of Rs. 50 crore in Loop group. Further, Essar group had also acted as a medium visavis Rajeev Chandrasekhar group for funding of Rs. 254 crore made by Rajeev Chandrasekhar group to Essar group and routed the amount received from Rajeev Chandrasekhar group to Loop group. Thus, the total investment by Essar group in Loop Group was Rs. 304 crore......"
CBI Vs. Ravi Kant Ruia and others Page 343 of 526Here the witness also deposed that Essar group funded Loop group to the tune of Rs. 50 crore indicating that the two groups are different.
383. PW 43 Sh. Narottam B. Vyas has also deposed about minutes of board meeting of ETHL held on 15.10.2004, Ex 40/DA (D23). These are important and as such are extracted as under:
".................................................................................. ...................................................................................
UNDERSTANDING WITH KHAITAN GROUP:
The Chairman informed the Board that the Khaitan Group, owned by Mr. I P Khaitan, a relative of the Ruia family and resident in Dubai, was in the process of finalizing the purchase of 26% shareholding in BPL Mobile Communications Limited which operates mobile services in Mumbai. He further informed that due to ongoing disputes and litigation among the various shareholders, it was likely that a controlling shareholding in BPL Communications Limited would also become available for sale at some point of time in the future. BPL Communications, through its subsidiary BPL Cellular operated mobile services in Maharashtra, Tamil Nadu and Kerala. He also briefed the board regarding his understanding of the capital structure of BPL Communications, including debentures and preference shares.
He further informed that an understanding had been reached with Mr Khaitan whereby
(a) Essar Group would advise and provide all necessary help to Khaitan Group regarding CBI Vs. Ravi Kant Ruia and others Page 344 of 526 acquisition of controlling interest in BPL Communications Limited as this was Khaitan Group's first exposure to telecom sector in India;
(b) In case Khaitan Group became successful in acquiring control, BPL Communications would give first right to the Company / Hutchison Essar to acquire the Maharashtra, Tamil Nadu and Kerala circles, and subject to necessary regulatory approvals, also first right to acquire the balance shareholding in Mumbai circle; and The Board discussed that a consolidation of BPL circles with Hutchison Essar would add substantial value to the Company's shareholding in Hutchison Essar and it would therefore be in the interest of the Company to pursue this proposal. The Board ratified the above understanding and asked Shri Vikash Saraf, Chairman to provide all necessary help to the Khaitan Group and to keep the Board informed of development.
It was further discussed that wherever possible and permissible by regulations, the Company should also examine purchase of shares/debentures/preference shares in BPL group companies for itself as it may be a good financial opportunity for the Company. ................................................................................... .................................................................................."
Thus, in the sale of BPL companies, the role of Khaitan Group was duly documented. PW 18 Sh. Anand Sonthalia was also director in ETHL. He proved its minute book as Ex PW 18/B. A minute book is deemed to be correct unless proved otherwise. Prosecution did not question the correctness of these minutes.
384. PW 43 Sh. Narottam B. Vyas, in his further CBI Vs. Ravi Kant Ruia and others Page 345 of 526 examinationinchief dated 10.04.2013, pages 4 to 7, deposed about various payments made to Khaitan Group and also purchase of investment of Nambiar Group and debentures from ICICI bank. His deposition reads as under:
About funding by Sh. Rajeev Chandrasekhar ".......I have also been shown board minute dated 13.07.2005 of Essar Teleholdings Limited, already Ex PW43/A10 (D23). I was present in this meeting as director. In this meeting, it was resolved to invest upto Rs.254 crore into NCDs of Santa Trading Private Limited. This was resolved as there was a company by the name of Jupiter Capital Advisers Limited belonging to Rajiv Chandrashekhar group, which had agreed with Khaitan Group to provide a funding of equivalent amount to them through Essar Teleholdings Limited. Accordingly, Essar Teleholdings Limited received an intercorporate deposit of Rs.254 crore from the abovesaid Jupiter Capital Advisers Limited and invested the same in STPL through subscription to the aforesaid NCDs.
Thus, this amount was funded by Rajiv Chandrshekhar Group to Khaitan Group. However, this fact is not mentioned in the minutes. This meeting was presided over by Sh. Vikash Saraf.
About payment by Essar group for Sh. I. P. Khaitan The ledger extract mentioned in my letter dated 01.09.2011, already Ex PW43/G, portion B to B, indicates that an aggregate sum of Rs.35 crore was paid to Essar Teleholdings Limited by Essar Group companies namely Essar Shipping Limited and Essar Investments Limited. Further, it indicates that a sum of Rs.15 crore was paid to Coimbatore Cablenet Private Limited (earlier known as Suryasamudra Finance and Investment Private Limited) by Essar Investments Limited. These two transactions aggregating to Rs.50 crore represent CBI Vs. Ravi Kant Ruia and others Page 346 of 526 funding of Rs.50 crore made by Essar Group with reference to acquisition of shares by Khaitan Group. Name of Khaitan Group is not mentioned in these details but it is so mentioned in the books of account of the company.
In the books of account of Essar Teleholdings Limited, there is account of Santa Trading (P) Limited and this fact is mentioned in this account. However, the extract of the account indicating this position was not sent by me to the IO, as it was not asked. This must be so mentioned in the entries pertaining to the period March to July 2004. No resolution was passed by the board of Essar Teleholdings Limited regarding funding of the aforesaid amount by Essar group companies.
I have been shown two cheques, both dated 16.07.2005, already Ex PW 7/B and 7/C (D379 and
380), for an amount of Rs. 170,50,00,000/ and Rs. 83,50,00,000/, and the aforesaid amount of Rs. 254 crore was paid to STPL through these cheques. Both these cheques bear my signature at point B as authorized signatory of Essar Teleholdings Limited.
The amount of Rs. 50 crore was returned by STPL to Essar Teleholdings Limited, though I do not know about the date of returning the money. I do not know as to from where the STPL arranged this amount of Rs. 50 crore for returning to Essar Teleholdings Limited. I know of Oblique Trading (P) Limited. This is a company of Saket Agarwal group. He is nephew (bhanja) of Ravi Kant Ruia. Essar Investment Limited purchased NCDs from Oblique Trading (P) Limited for an amount of Rs. 50 crore, though I do not know about the date.
About purchase of stake of Nambiar group Essar group had paid, through one of its companies, an amount of Rs. 124.99 crore to Nambiar group. This amount was paid as Essar group had decided to purchase, through ETHL, preference shares and debentures of a company of CBI Vs. Ravi Kant Ruia and others Page 347 of 526 BPL group, though I do not know the exact name of the company, belonging to T. P. G. Nambiar.
I have been shown a certified copy of letter dated 15.07.2005 D75, page 15, written by Vikash Saraf to Indian Global Competitive Fund, SREI Venture Capital Limited. I identify signature of Vikash Saraf at point A. The letter is now Ex PW 43/L. This letter has been certified by Sh. Girish Sathe at point B. As per this letter, the aforesaid amount of Rs. 124.99 crore was funded out of a loan of Rs. 300 crore availed by ETHL from India Global Competitive Fund. This fact is in my personal knowledge also.
I have heard of Black Lion Limited. However, this is not an Essar group company and, as such, I do not know anything about it. However, ETHL had purchased some preference shares from it of a BPL group company for a sum of Rs. 133.83 crore. I have been shown a certified copy of bank book in the books of Essar Teleholdings Limited (D76, page 30). This has been certified by Girish Sathe at point A and is now Ex PW 43/M. The fact of aforesaid purchase of preference shares is mentioned in this bank book. This amount had come from the two companies of Essar group, namely, Essar Investment Limited and Essar Power Limited, as is mentioned in Ex PW 43/M itself .
ETHL had also purchased debentures worth Rs. 410 crore of BPL Communications Limited from ICICI Bank......."
Thus, the witness narrated that funding worth Rs. 254 crore was provided by Sh. Rajiv Chandrasekhar himself to Khaitan group.
PW 43 Sh. Narottam B. Vyas in his further examinationinchief dated 10.04.2013, pages 10 and 11, also deposed about purchase of equity of BPL Communications CBI Vs. Ravi Kant Ruia and others Page 348 of 526 Limited by STPL from ICICI Bank and payments made by Essar Group as under:
".......I do recall that STPL had made payment to ICICI Trusteeship for purchase of equity shares of BPL Communications Limited. This payment was made by Essar group against which NCDs were issued by STPL to the company amounting to Rs. 80 crore.
I have been shown Ex PW 43/F3 (D353), which is a bank statement of Karthik Financial Services Limited in Royal bank of Scotland. This statement shows that on 14.09.2007 Karthik Financial Services had received a sum of Rs. 5,66,50,000/ from BPL Mobile Communications Limited. I have also been shown Ex PW 43/F1 (D353), which is a bank statement of Essar Investments Limited with the Royal Bank of Scotland. This statement shows that on 13.09.2007, an amount of Rs. 5.70 crore was paid by Essar Investments Limited to BPL Communications Limited.
I have been shown cheque dated 30.06.2006, already Ex PW 26/B (D323). This cheque has been issued by me on behalf of Essar Investments Limited in favour of STPL for an amount of 30,08,00,000/. This bears my signature at point A. This cheque was issued for purchasing NCDs of STPL. The total NCDs purchased by Essar Investments Limited of STPL were to the tune of Rs. 1593 crore.
I have been shown cheque dated 31.08.2007 (D314). I have issued this cheque as authorized signatory of ETHL. It bears my signature at point A and the same is now Ex PW 43/O. This cheque has been issued for an amount of Rs. 140 crore in favour of BPL Communications Limited......."
Thus, he deposed that total nonconvertible debentures purchased by Essar Investments Limited of STPL CBI Vs. Ravi Kant Ruia and others Page 349 of 526 were worth Rs. 1593 crore.
385. In his further examinationinchief dated 11.04.2013, pages 1 and 2, PW 43 Sh. Narottam B. Vyas deposed as to how payment of Rs.254 Crore was made to Sh. Rajiv Chandrasekhar. His deposition reads as under:
"......No counter guarantee was given by ETHL for the amount of Rs.254 crore obtained from Jupiter Capital Advisers Limited. This amount was given by ETHL to STPL and from STPL, it must have gone to Rajiv Chandrashekhar group. The purpose of movement of this amount was that Sh. Rajiv Chandrashekhar wanted the deal to be firmed up. The amount of Rs.50 crore was given by ETHL in respect of the shares belonging to Rajiv Chandrashekhar group for which ETHL had entered into an optioncumpurchase agreement with an intention to assign the same to Khaitan group of companies. Out of Rs.50 crore, Rs.15 crore was paid by Essar Investments Limited on behalf of ETHL, Rs. 5 crore was paid by Essar Shipping Limited on behalf of Essar Investments Limited and the balance payment of Rs.30 crore was made by Essar Teleholdings Limited. This entire payment of Rs.50 crore has been made through Essar Investments Limited and the Ex PW43/G1 is representative of this amount of Rs.50 crore in the books of accounts of Essar Investments Limited. From ETHL, the money went to the companies of Rajiv Chandrashekhar group......"
Thus, in his examinationinchief, Sh. Narottam B. Vyas deposed about transfer of money between Essar Group and Khaitan Group in detail. He deposed that BPL companies were purchased by Sh. I. P. Khaitan. Prosecution did not put any question on facts to the witness about the transactions except CBI Vs. Ravi Kant Ruia and others Page 350 of 526 getting the documents proved mostly by identification of signatures.
386. In his crossexamination dated 11.04.2013, pages 8 to 15, PW 43 Sh. Narottam B. Vyas justified all the transactions between the two groups. His deposition reads as under:
About purchase of BPL companies ".......I was a director in ETHL. It is correct that agenda for the meeting of ETHL was only a proposal for the board of directors to consider during the meeting. It is correct that decisions used to be taken by the board collectively. It is correct that information given to the board would be discussed by the board and thereafter only, decisions would be taken. It is correct that decisions taken by the board were in the interest of the company. It is also correct that these decisions were informed decisions. Question: I put it to you that the board of ETHL used to take independent decisions without any instructions from anyone including Mr. Ravikant Ruia and Mr. Anshuman Ruia?
Answer: That is correct.
It is correct that ETHL did not have any CEO. It is correct that this was only an investment company. It is correct that Sh. Vikash Saraf was only an Advisor in the company. Again said, he was Advisor plus director in the company. It is correct that he was required to take approval of the board before undertaking any transaction on behalf of ETHL. It is correct that Vikash Saraf only implemented the decisions of the board of directors of ETHL. Court Ques: Since Vikash Saraf was a director also, in that capacity he was also part of the decision making process on behalf of the company? Ans: That is correct.
I have been shown minutes book of ETHL, already Ex PW 18/B and therein my attention has been invited to the minutes of board meeting held on 15.10.2004. I attended this meeting as one of the CBI Vs. Ravi Kant Ruia and others Page 351 of 526 directors. The minutes have been signed by Sh. Vikash Saraf and the same are already Ex PW 40/DA. It is correct that as per these minutes it was decided that ETHL would advice and provide all necessary help to the Khaitan group in their endeavour to acquire controlling interest in BPL Communications Limited. This was done as it was beneficial in the interest of ETHL also. It is correct that as per these minutes if Khaitan group became successful in acquiring the controlling stake of BPL Communications Limited, HEL would have the first right to purchase BPL Mobile Communication Limited and BPL Mobile Cellular Limited. It is correct that the acquisition of these two companies by HEL would have added substantial value to ETHL shareholding in HEL.
Ques: I put it to you that ETHL never intended to acquire a controlling interest in BPL Communications Limited?
Ans: That is correct.
It is also correct that, in fact, also this company never acquired controlling interest in BPL Communications Limited.
About legal opinion and sale to HEL It is also correct that as per minutes already Ex PW 40/DA, ETHL decided to purchase equity, debentures and preference shares of BPL companies only to the extent permissible in law. It is correct that this decision was guided solely by the commercial considerations. It is also correct that this was an independent decision of the board. It is correct that to examine the legally permissible limit in this regard, it was decided to obtain the opinion of Sh. Prem Rajani, Advocate. It is correct that Sh. Prem Rajani initially gave an oral opinion in this regard. It is correct that in the board meeting held on 18.03.2005 of ETHL, the minutes of which are already Ex PW 43/A7, it was decided to purchase equity shares and nonconvertible debentures from CBI Vs. Ravi Kant Ruia and others Page 352 of 526 ICICI. It is correct that this decision was taken in view of the opinion of Sh. Prem Rajani that this was legally permissible to do so. It is correct that Prem Rajani also gave a written opinion and I have seen that opinion. Ex PW 40/DB contains this opinion of Sh. Prem Rajani. I cannot say if this opinion was obtained for being handed over to ICICI bank, with whom negotiations were going on for purchase of the equity and debentures.
It is correct that as per the opinion of Sh. Prem Rajani, ETHL could legally purchase 25% equity of BPL Communications Limited. It is correct that as per board minutes dated 08.06.2005, already Ex PW 43/A9, ETHL purchased 7.25% equity of BPL Communications Limited and authorization of this purchase is reflected in this resolution. It is correct that purchase of this percentage of equity and preference shares was in accordance with opinion of Sh. Prem Rajani. It is correct that at the time of these purchases, board was of the view that these purchases were legally permissible. It is correct that these purchases were made by ETHL for itself with a view to make profit when the subsidiaries of BPL Communications Limited would be sold to HEL. It is correct that at the time of these purchases, there was no intention to transfer these instruments to Khaitan group. It is correct that these purchases were not made by ETHL to provide funding to Sh. I. P. Khaitan or any of his companies. It is correct that the decision to sell equity, preference shares and debentures of BPL Communications Limited to I. P. Khaitan group was taken subsequent to the termination of agreement between HEL and Khaitan on 01.08.2006. The decision to sell these things was taken on 16.12.2006 by the board of ETHL as is reflected in the minutes already Ex PW 18/C2.
About assignment of agreements and role of Sh. I. P. Khaitan It is correct that in the minutes dated CBI Vs. Ravi Kant Ruia and others Page 353 of 526 28.01.2005, already Ex PW 43/A6, it is recorded that ETHL would also have right to assign its rights under the option in share purchase agreement to any other person. It is correct that this was in reference to the purchase of shares of BPL Communications Limited held by four Rajeev Chandrasekhar companies. These four companies were Epsilon Advisors (P) Limited, Tayana Consultants (P) Limited, Vectra Holdings (P) Limited and Coimbatore Cablenet (P) Limited. It is correct that these four companies held controlling interest in BPL Communications Limited.
The four share purchase agreements, already Ex PW 40/G, 40/H, 40/J and 40/K, were assigned to STPL vide assignment letters, already Ex PW 40/G2, 40/H2, 40/J2 and 40/K2. It is correct that these four assignment letters speak about ETHL not having any ownership interest in STPL. It is correct that ETHL never intended to buy these shares for itself. It is correct that the decision by the board of ETHL to help I. P. Khaitan in acquiring controlling interest in BPL Communications Limited was taken in the board meeting held on 15.10.2004. It is correct that it was known to the board that I. P. Khaitan was an NRI and, as such, could not directly purchase controlling interest in BPL Communications Limited, either individually or through a foreign based company. Again said, a foreign company could not acquire controlling interest directly and an Indian company was needed for this. It is correct that board of ETHL knew that I. P. Khaitan was in the process of acquiring an Indian company. It is correct that the board of ETHL knew that process of acquiring an Indian company would take some time. I cannot say that the board of ETHL knew that there was pressure from ICICI on Rajeev Chandrasekhar to repay its loan and, as such, he was in hurry to sell his stake in BPL Communications Limited, though I know that he was eager to sell his shares. It is correct that the purpose of ETHL CBI Vs. Ravi Kant Ruia and others Page 354 of 526 entering into share purchase agreements with the four Rajeev Chandrasekhar companies was to assign it to a I. P. Khaitan held Indian company after one was acquired by him.
About payment It is correct that cheques Ex PW 7/B and 7/C were signed by me only after sighting the transfer instructions, already Ex PW 7/F and 7/G, by which ETHL was to receive Rs. 254 crore from Jupiter Capital Advisers (P) Limited on the same day. It is correct that as per the minutes dated 13.07.2005, already Ex PW 43/A10, ETHL had decided to invest up to Rs. 254 crore in the NCDs of STPL and it is also correct that this investment was to be made out of the money to be received from Jupiter Capital Advisers (P) Limited. This position is also reflected in the bank statement Ex PW 7/D, as there was no sufficient balance in the bank account to enable this investment of Rs. 254 crore.
Ques: You have stated in your examinationinchief that total investment of Essar group in Loop group was Rs. 304 crore. I put it to you that you have so stated because you have included in this amount advance of Rs. 254 crore also given by Jupiter Capital Advisers (P) Limited?
Ans: By my statement in examinationinchief I mean that Rs. 304 crore included acquisition by ETHL of STPL debentures which were sourced out of the advance of Rs. 254 crore received by ETHL from Jupiter Capital Advisers (P) Limited, I mean utilization of this money for purchasing the aforesaid NCDs.
It is correct that out of Rs. 304 crore, Rs. 50 crore came from ETHL and Rs. 254 crore came from Jupiter Capital Advisers (P) Limited."
Thus, he justified the entire transaction as it was done by Sh. I. P. Khaitan for ultimate sale of BPL companies to CBI Vs. Ravi Kant Ruia and others Page 355 of 526 HEL. He also reaffirmed that funding of Rs. 254 crore came from Sh. Rajeev Chandrasekhar.
387. In his further crossexamination dated 29.07.2013, pages 3 and 4, PW 43 Sh. Narottam B. Vyas also deposed about the receipt of money from Hutchison Essar Limited and issue of debentures by ETHL to BPL Communications Limited as under:
"......It is correct that at that time I was reporting to group CFO, to whom all sectoral CFOs report. It is correct that at that time I was aware that BPL Communications Limited and STPL were I. P. Khaitan companies. It is correct that I was aware that in 2005 I. P. Khaitan would receive substantial funds from Hutchison Essar Limited and he had agreed to lend this fund to Essar group, but I cannot point out any specific document in this regard. However, this fact was told to me by group CFO Sh. V. G. Raghavan. It is correct that as per document Ex PW 43/G4 (D74), an amount of more than Rs. 2700 crore was received by Essar Teleholdings Limited from Hutchison Essar Limited on behalf of BPL Communications Limited. This payment was made as per the instructions of BPL Communications Limited. It is correct that after this ETHL sold debentures worth Rs. 2421 crore to BPL Communications Limited. It is correct that the balance amount of Rs. 316 crore was kept by BPL Communications Limited as short term advance with ETHL and this fact is reflected in Ex PW 58/A20 (D61). An amount of Rs. 140 crore, out of the aforesaid Rs. 316 crore, was returned by ETHL to BPL Communications Limited vide cheque Ex PW 43/O (D314) signed by me. I signed this cheque after being authorized by the board, on the request of Sh. I. P. Khaitan. Certificate already Ex PW 15/DH4 correctly reflects the facts stated therein. I have been shown a certified copy of a certificate of Nisar and Kumar, addressed to Essar Investments CBI Vs. Ravi Kant Ruia and others Page 356 of 526 Limited, dated 19.02.2011, and this reflects the facts correctly as the information was provided to the chartered accountants by me and my team members pertaining to Essar Investments Limited. The same is now Ex PW 43/DE. It is correct that as per this certificate, Essar group was a net borrower from I. P. Khaitan group between 31.03.2006 to 31.01.2011......."
Thus, he deposed that more than Rs. 2700 crore was received from HEL on behalf of BPL Communications Limited. He also deposed that Sh. I. P. Khaitan had agreed to lend this amount to Essar group.
PW 43 Sh. Narottam B. Vyas in his cross examination dated 11.04.2013, page 5, also deposed as to whom Shipping Stop Dot Com (India) private Limited belonged to in the beginning and to whom it belonged in 2007. He deposed that in 2007, Shipping Stop Dot Com (India) (P) Limited belonged to Sh. I. P. Khaitan. His deposition reads as under:
"As per document D209, page 14, I was appointed authorized signatory to operate the bank accounts of Shipping Stop Dot Com (India) (P) Limited from 02.09.2002 in ABN Amro Bank. This is an extract of board resolution passed by the board in its meeting on 02.09.2002. It has been certified by Sh. Girish Sathe at point A, which I identify and the same is now Ex PW43/DA. It is correct that at that time, this was an Essar group company. It is also correct that in 2007, this company became a Khaitan group company. Letter already Ex PW 43/Q, which is an undated letter, was written when this company was an Essar group company......."CBI Vs. Ravi Kant Ruia and others Page 357 of 526
PW 43 Sh. Narottam B. Vyas in his further cross examination dated 29.07.2013, page 7 to 9, deposed as to how the investment in BPL Communications Limited was sold by ETHL to I. P. Khaitan. His deposition reads as under:
"......It is correct that in the board meeting of ETHL held on 16.12.2006, the minutes of which are already Ex PW 18/C2, was chaired by me and a decision was taken to sell the investments made by ETHL in BPL Communications Limited, as stated in these minutes. It is correct that this decision was triggered by the fact that BPL Communications Limited did not wish to sell BPL Mobile Communication Limited to HEL. It is correct that because of this there was a dispute between BPL Communications Limited and HEL, which led to arbitration proceedings between the two. It is correct that this investment consisted of only 7.25% equity and balance was in NCDs and preference shares, which did not carry any voting rights, it was difficult to find buyer for this investment and so it was decided to sell it to Sh. I. P. Khaitan between December 2006 to March 2007. After this ETHL was not involved in any transaction pertaining to BPL Mobile Communication Limited.
It is correct that the decision to purchase shares from Nambiar group was of Essar Teleholdings Limited, which is part of Essar group. Volunteered : During my examinationinchief I had used the word "Essar group" as at that time, I was not remembering the name of Essar Teleholdings.
This position is reflected in Ex PW 43/A9 (D23), page 22. It is correct that payment for the same was made by ETHL.
The payment of Rs. 80 crore made by STPL to ICICI Trusteeship was sourced from ETHL. It is correct that at that time Essar group owed more CBI Vs. Ravi Kant Ruia and others Page 358 of 526 than Rs. 1300 crore to Khaitan group.
The board meeting of ETHL held on 28.01.2005 was attended by me as director as reflected in its minutes already Ex PW 43/A6 (D23), page 11. It is correct that four draft share purchase agreements were placed before the board and the same were approved and these are already Ex PW 40/G, 40/H, 40/J and 40/K (D33 to D37). It is correct that an amount of Rs. 50 crore was required to be paid to four companies of Rajeev Chandrasekher as purchase deposit and this fact is reflected in the four agreements, which were approved by the board. It is correct that while working for Loop group of companies, Mr. Vikash Saraf was taking instructions from I. P. Khaitan."
Thus, he deposed as to how Essar group sold its investment in BPL companies to Sh. I. P. Khaitan. He also deposed that while working in Loop group, Sh. Vikash Saraf was taking instructions from Sh. I. P. Khaitan. He also justified payment of Rs. 80 crore by ETHL to ICICI Trusteeship Council as Essar group owed Khaitan group more than 1300 crore.
PW 43 Sh. Narottam B. Vyas in his further cross examination dated 29.07.2013, page 6, deposed as to how he became authorized signatory of Shipping Stop Dot Com (India) Private Limited on the asking of I. P. Khaitan. His deposition reads as under:
"........It is correct that Vikash Saraf informed me that Sh. I. P. Khaitan required some reliable person based in Mumbai to become signatories to bank accounts for various BPL companies for administrative convenience and I became one of such signatories. It is correct that I was also informed by Vikash Saraf CBI Vs. Ravi Kant Ruia and others Page 359 of 526 that in this regard I was to take instructions from I. P. Khaitan for operation of bank accounts. It is correct that cheque already Ex PW 24/E (D212) was signed by me on the instructions of Sh. I. P. Khaitan. It is correct that when I signed this cheque, Shipping Stop Dot Com (India) (P) Limited was recently transferred to Sh. I. P. Khaitan and there was no one to sign cheques on its behalf and this was the reason of the request made by Sh. I. P. Khaitan........"
The gist of the testimony of PW 43 Sh. Narottam B. Vyas is that whatever was being done was done correctly, legally and as per the instruction of I. P. Khaitan.
388. The deposition of Sh. Narottam B. Vyas is corroborated by PW 51 Sh. S. V. Venkatesan, who was also a director in ETHL. In his examinationinchief dated 12.04.2013, pages 8 and 9, he deposed as under:
"........My role in board meetings as an independent director was to ensure that the proposal placed before the board makes business sense and fully complies with the laws of the land and if any, resources were required for the proposal, adequate arrangements therefor were made.
Question: Kindly take a look on the board meeting of ETHL held on 28.01.2005, already Ex PW 43/A6.
Therein is a resolution for purchase of shares of BPL Communications Limited. Who proposed this? Answer: The proposal was made by Sh. Vikash Saraf as head of Telecom business group and it was approved by the board.
Question: Who negotiated the price for the aforesaid purchase of shares?
Answer: I presume that this was negotiated by the head of the Telecom Business group, that is, Sh. Vikash Saraf and it was approved by the board. Question: Would you please tell this Court as to CBI Vs. Ravi Kant Ruia and others Page 360 of 526 who used to take decisions on behalf of ETHL, regarding matters which were to be placed before the board?
Answer: In all matters pertaining to Telecom matters, the papers used to be put up by Sh. Vikash Saraf and approved by the board and may also be rejected.
I used to receive sitting fee as an independent director whenever I attended any board meeting........"
Thus, this witness deposed that as independent director, he ensured that the proposal placed before the board complied with the laws of the land. The prosecution did not put any question on facts to him as to how the transactions were not in compliance with the law, but it is trying to fault them by way of arguments alone.
PW 51 Sh. S. V. Venkatesan in his crossexamination also dated 12.04.2013, pages 12 and 13, deposed about the NCDs issued by STPL as under:
".......It is correct that request for investment in Rs. 600 crore NCDs of STPL had come from Sh. I.P. Khaitan, as the request had come from a Khaitan group company. This is reflected in the minutes Ex PW51/A7. The decision was to be taken in this meeting held on 28.04.2006 but the matter was adjourned. I do not recall as to what was the issue for adjournment but I do recall that there was a dispute. I do recall that there was a dispute regarding sale of BPL Mobile Communication Limited to HEL but I do not recall the nature of dispute.
It is correct that as per minutes, Ex PW51/A17 based on a request received from Loop Telecom Limited, the board of EIL resolved to place an ICD of CBI Vs. Ravi Kant Ruia and others Page 361 of 526 an amount of Rs.852 crore with LTL. It is correct that Loop Telecom Limited was a Khaitan group company. I do not recall as to what was the exact amount due from EIL to Khaitan group but I do recall that substantial amount was due. I have been shown certificate dated 19.05.2009, already Ex PW15/DH4 (D148) (page47), an amount of Rs. 2421 crore was due from EIL to BPL Communications Limited, a Khaitan group company. Since the substantial amount was due from EIL to BPL Communications Limited, the aforesaid decision was taken to invest in ICDs of 852 crore. Certificate Ex PW15/DH4 is a certificate issued by auditor of the group.
It is correct that resolution in minutes, already Ex PW51/A18, regarding pledge of shares at item no.14, was passed as three institutions namely Industrial Development Bank of India, Infrastructure Development Finance Company Limited and Axis Bank wanted the same.
I have been shown book of board minutes of Essar Investments Limited, already Ex PW43/DC, and therein my attention has been invited to minutes of the meeting held on 13.09.2006, already Ex PW51/A10. It is correct that in these minutes, the decision to purchase NCDs of STPL was taken as substantial amount was due from Essar group to Khaitan group........"
Thus, this witness corroborated Sh. Narottam B. Vyas in all respects. In his crossexamination dated 12.04.2013, page 14, he deposed that Loop companies were not part of Essar group. His deposition reads as under:
"..........It is correct that I was associated with Essar group since 1986. It is correct that I am well conversant with the different Essar group companies. It is correct that Loop Telecom Limited, Loop Mobile India Limited, Loop Mobile Holding CBI Vs. Ravi Kant Ruia and others Page 362 of 526 (India) Limited and Santa Trading Private Limited were not Essar group companies.........."
389. PW 18 Sh. Anand Sonthalia, who was also a director in ETHL deposed about sale of investment held by ETHL in BPL to STPL. He corroborated the version of Sh. Narottam B. Vyas and Sh. S. V. Venkatesan.
PW 18 Sh. Anand Sonthalia, CEO, Essar Projects (India) Limited, who was also a director in Essar Teleholding Limited, in his examinationinchief dated 04.10.2012, pages 3 and 4, deposed about sale of investment held by ETHL in BPL Communications Limited to STPL. His deposition reads as under:
".......In this meeting, that is, meeting dated 16.12.2006, two resolutions were passed, as mentioned in the minutes. I came to know about these proposals from Sh. Vikash Saraf one or two days before the meeting. He had told me that he was putting forward a proposal and I should see to it. This conversation took place by telephone, but I do not remember the exact mode of conversation. The telephone is quite logical mode. When the proposal came in the board meeting of the company, Sh. N. B. Vyas and myself read the proposal and resolved to approve the proposal. Before that day, I was not knowing anything about Santa Trading (P) Limited. On 16.12.2006, Vikash Saraf was de facto working as Chief Executive Officer of telecom business of Essar group.
I know Sh. I. P. Khaitan personally. I know his wife also Ms. Kiran Khaitan. Sh. Ravi Kant Ruia and Sh. Shashi Kant Ruia are promoters of Essar group. Ms. Kiran Khaitan is sister of Ravi Kant Ruia and Shashi Kant Ruia and is married to I. P. Khaitan. I have met I. P. Khaitan only on social occasions in the CBI Vs. Ravi Kant Ruia and others Page 363 of 526 presence of Ravi Kant Ruia and Shashi Kant Ruia."
PW 18 Sh. Anand Sonthalia in his cross examination, pages 4 to 6, deposed about sale of investment to STPL as under:
"........While approving the proposal put forward by Vikash Saraf, the board in its meeting dated 16.12.2006 also saw to it that it was not in violation of any law and after satisfying itself about it, the board passed the resolution. Whenever any proposal is put before the board, normally the board applies its independent mind and sees to it that it is as per law and passes it and in case it is not satisfied about its validity, the board rejects the same.
It is correct that on 31.03.2006, Aegis BPO Services Limited was an Essar group company. It is correct that on that day, a resolution was passed by the board to give guarantee to UTI on behalf of Aegis Communications Group Inc., United States. No fee was charged from the company by ETHL for extending this guarantee. Similarly, no counter guarantee was taken. This was not done as Aegis Communications Group Inc, United States, was an Essar group company. Generally, this is the normal practice amongst the Essar group companies.
It is correct that in the board meeting dated 16.12.2006, Ex PW 18/C2, ETHL decided to sell certain equity shares, preference shares and debentures, held by it in BPL Communications Limited for a total consideration of not less than Rs. 678 crore. It is correct that discussion took place between I. P. Khaitan and Vikash Saraf in this regard and the board was informed about that. The reason as to why these shares were being sold was also discussed, but was not recorded in the minutes. It is correct that the reason was that an agreement between BPL Communications Limited and Hutchison Essar Limited was terminated. I do not CBI Vs. Ravi Kant Ruia and others Page 364 of 526 remember if this agreement pertained to Mumbai service area licence of BPL Communications Limited.
The agreement broke down due to differences between BPL Communications Limited and Hutchison Essar Limited and therefore, ETHL thought it not fit to continue with the aforesaid shares and to sell the same. It is correct that ETHL made a profit of approximately Rs. Ten crore out of this sale......."
Thus, the witness deposed that ETHL sold its investment to STPL for Rs.678 Crore, as the sale of BPL Mobile Communications Limited to HEL could not take place.
390. DW 3 Sh. S. Srinivasa was Senior Vice President (Corporate Strategy) in BPL Mobile Communication Limited in 20042005. In his examinationinchief, he deposed about the shareholding of the company and as to why the majority shareholders wanted to sell the company due to interse disputes. He also deposed as to how the payment of Rs. 254 crore was made through American Express Bank. In his examinationinchief dated 21.08.2014, pages 2 to 7 reads as under:
About sale of stake of Sh. Rajeev Chandrasekhar "........In these circumstances, Sh. Rajeev Chandrasekhar had no option, but to sell his shares. Accordingly, M/s J. M. Morgan & Stanley were appointed financial advisors to look for potential buyers and they scouted some potential buyers including Reliance, Airtel, Alpha group, Orascom, but all of them were interested in buying the shares after litigation was sorted out, but the efforts to sell the shares continued. In mid2004, Sh. Rajeev Chandrasekhar told me that Sh. Ravi Ruia had met him on behalf of his brotherinlaw Sh. I. P. Khaitan, CBI Vs. Ravi Kant Ruia and others Page 365 of 526 who was interested in buying his (Rajeev Chandrasekhar) shares. Sh. Rajeev Chandrasekhar told me that his main interest was to sell his shares, but at the same time he also wanted a closure on all litigation by getting waiver/ releases from different shareholders involved in different litigation. Apart from litigation by foreign shareholders, there was a litigation between Sh. Rajeev Chandrasekhar and Sh. T. P. G. Nambiar, who had also gone to Court, that is, Company Law Board. In these circumstances, Sh. Rajeev Chandrasekhar asked me to constitute two teams, one of financial advisors for sale of shares and other of lawyers for getting releases/ waivers from other shareholders. Accordingly, the team of financial advisors included J. M. Morgan and Stanley, Shrikant Doijode and myself and other team included Sh. Shrikant Doijode and myself. For sale of shares, Sh. Vikash Saraf contacted me and for obtaining releases, I was to deal with Sh. Prem Rajani.
Ques: Who were the persons involved in the negotiations for the purchase of shares of Sh. Rajeev Chandrasekhar from other side?
Ans: For documentation purposes, it was Sh. Vikash Saraf, Sh. Amit Gupta and Sh. Prem Rajani. For payment structure, it was Sh. Prem Rajani and Sh. I. P. Khaitan.
Most of the offices of both parties were in Mumbai, so the discussions happened in Mumbai. However, some discussions with Sh. Rajeev Chandrasekhar also took place in Bangalore. Ques: Do you know why Sh. Vikash Saraf was involved in these negotiations?
Ans: I was approached by Sh. Vikash Saraf from Essar and he said he was assisting Sh. I. P. Khaitan in this, but I have no extra knowledge other than what Sh. Vikash Saraf told me.
I have been shown agreement Ex PW 54/D1 collectively, pages 9 to 30. I have no knowledge of this agreement. However, I am acquainted with the CBI Vs. Ravi Kant Ruia and others Page 366 of 526 annexures to this agreement Exhibit B1, B2 and C, which are releases from foreign shareholders to Sh. Rajeev Chandrasekhar and his companies and vice versa. These releases were executed pursuant to negotiations in which I myself was a party.
Eventually the shares of Sh. Rajeev Chandrasekhar and his companies were purchased by Santa Trading (P) Limited, the company owned by Sh. I. P. Khaitan. I am aware of agreements already Ex PW 40/G, G1, 40/H, H1, 40/J, J1, 40/K and K3 and assignment letters Ex PW 40/G2, H2, J2 and K2.
Ques: Could you please tell this Court that when the shares were sold to STPL, why was the agreements entered into between ETHL and various companies of Rajeev Chandrasekhar?
Ans: There was pressure from ICICI Bank for the sale of shares and Sh. Rajeev Chandrasekhar had to show his intent of sale before the end of financial year, but there was no Indian company of Sh. I. P. Khaitan at that point of time to buy these shares. So, we could not have sold these shares to any of his foreign companies as that would have led to violations of FDI norms. So in order to accommodate Sh. Rajeev Chandrasekhar and his companies, these agreements were entered into with Essar Teleholdings Limited, but with clear understanding that these shares would be assigned to an Indian company of Sh. I. P. Khaitan.
After signing these agreements, we started getting the releases from foreign shareholders and Sh. T. P. G. Nambiar and finally when that Indian company Santa Trading (P) Limited was formed by Sh. I. P. Khaitan, shares of companies of Sh. Rajeev Chandrasekhar were sold, that is, final sale happened now. The aforesaid agreements were also assigned to STPL and thereafter, the sale took place. Before doing all these things, legal opinion was obtained by us.
I am also aware of agreement Ex PW 33/A CBI Vs. Ravi Kant Ruia and others Page 367 of 526 (D37). This agreement pertain to disputed shares of Sh. Rajeev Chandrasekhar, held by Epsilon Advisors (P) Limited. These shares were sold directly to STPL and this agreement was executed on 15.07.2005.
These shares were sold directly to STPL as these could not have been sold earlier on account of dispute, as by that time, STPL had already been formed.
About payment The sale consideration of these shares of Sh. Rajeev Chandrasekhar and his companies was Rs. 304 crore. This amount was agreed to be paid by way of Rs. 50 crore as advance and balance at the time of closure. However, STPL had a problem in paying the balance amount as no money had come to it by that time. So the company was asking for a time frame of three to six months for paying it, which was not agreeable to Sh. Rajeev Chandrasekhar and his companies. He was clear that transaction should attain closure. Accordingly, we had to work out a structure of payment in consultation with J. M. Morgan and Stanley and legal advisors. We wanted the request to be accommodated, but at the same time closure to the transaction. Accordingly, a structure was worked out in which STPL would give us the balance money and we would transfer it as a separate transaction like an ICD to a different company with assets. The main problem was that STPL had no money and, as such, where from would it pay us. Then, American Express bank came out with a solution that if all parties opened their accounts in the same branch of this bank, they can do transfer, which is basically a book entry. Accordingly, a book entry was made, that is, a debit entry in the account of STPL and a credit entry in the accounts of Epsilon, Vectra, Tayana and Coimbatore Cables. Again debit entries were made in the accounts of all these four companies and credit entry was made in the account of Jupiter CBI Vs. Ravi Kant Ruia and others Page 368 of 526 Capital, a company of Rajeev Chandrasekhar. Again account of Jupiter Capital was debited and the account of ETHL was credited. Again the account of ETHL was debited and that of STPL was credited. However, there was no physical/ actual movement of money, only book entries were there. These things were effected by opening accounts of all entities in the same branch of American Express Bank. The closing and opening balance of all entities remained same.
STPL could not bring money as its owner Sh. I. P. Khaitan needed some regulatory approvals for moving his money from abroad to India. I am acquainted with fund transfer instructions, Ex PW 7/F and 7/G, given by Jupiter Capital Advisors to American Express Bank with regard to the balance amount of Rs. 254 crore.
About overseas companies I am acquainted with annexure II and III to agreement Ex PW 40/P, at pages 25 to 27. CDC Financial Service and SouthAsia Regional Fund had shares in BPL Communications Limited, the holding company, and Sh. Rajeev Chandrasekhar and his companies had right to first refusal on these shares and as per these annexures, these two companies were released by Sh. Rajeev Chandrasekhar and his companies from the aforesaid right. Accordingly, these annexures were executed. I do not have any knowledge as to who own Capital Global Limited and Black Lion Limited, but during negotiations I was told by Sh. Prem Rajani that these companies were owned by Sh. I. P. Khaitan. As far as I know, Ms. Kiran Khaitan never took part in any negotiations........"
In this long deposition, he categorically deposed that the shares were purchased by Sh. I. P. Khaitan. He deposed about the fund transfer instructions of Rs. 254 crore by Jupiter CBI Vs. Ravi Kant Ruia and others Page 369 of 526 Capital Advisors to American Express Bank. This witness was crossexamined by the prosecution. His crossexamination reads as under:
"........I have stated the shareholding percentage of each shareholder as well as the amount of loan from ICICI on the basis of my memory though the actual figure may be slightly different. Sh. Vikash Saraf was working for Essar Group. Sh. Prem Rajani has his own law firm. I do not know if Sh. Prem Rajani has been director on the board of companies of Essar group. Whenever we met him, we met him in his office. I do not know if anyone from the office of Sh. Prem Rajani was on the board of companies of Essar group. I have no knowledge if Sh. Prem Rajani used to work for Essar group.
About payment The book entry of Rs. 254 Crore started from STPL and ended with it after taking a circuitous route. I do not know if there was any credit balance on the date of starting of this book entry in the account of STPL or not. By and large, there will be no payment from an account if there is no credit balance but it depends on relationship with the bank. The total amount of book entry at each stage remained the same, but the amount was split up into smaller entries depending upon sale proceeds of each shareholder. I am aware of the movement of the money up to ETHL from STPL and I had seen the documents in this regard. However, I had not seen any document to show that in the end the money reached from ETHL to STPL. I have stated about movement of money from ETHL to STPL on the basis of discussions which were taking place. I do not know if ETHL had given some funds to STPL on the date of this circuitous transfer on the date of book entry as there is no means for me to know it. It is wrong to suggest that I have no knowledge about the movement of money through the book entries.CBI Vs. Ravi Kant Ruia and others Page 370 of 526
Volunteered: I was party to it and I have seen the documents. I have not seen any document showing that ETHL had given funds first to STPL on the date of circuitous transaction.
We were only told about the regulatory problems faced by Mr. I.P. Khaitan in bringing money from abroad to India in STPL, though no documents in this regard was seen by me. I do not know if any money ultimately came from overseas in STPL as we were not bothered after our transaction was over. The repayment of loan to ICICI Bank was finally settled by the buyer of shares of Sh. Rajeev Chandrasekhar and his company. I do not know if ICICI Bank suffered any loss in this transaction or not. It is correct that I am telling about the involvement of Mr. I.P. Khaitan in the negotiations for the first time as I have come to the court for the first time.
Ques: Did Mr. I.P. Khaitan or any other accused ever ask you to go and tell these facts to investigating agency or any other forum?
Court Order: The witness blurted out "No" before the relevancy of the question was settled. The learned PP submits that the question is relevant to prove that the witness is stating the fact for the first time. That is obvious from the reply itself. Question is irrelevant and disallowed.
It is wrong to suggest that Mr. I.P. Khaitan never participated in the negotiations. Ques: I put it to you that you cannot say that shares were ultimately purchased for Mr. I.P. Khaitan? Ans: To my knowledge, the shares of Sh. Rajeev Chandrasekhar and his company were bought by STPL.
Volunteered: STPL was Mr. I.P. Khaitan's company. I do not know if STPL was Essar group company as there is no means for me to know it. It is wrong to suggest that my knowledge about STPL being a company of Mr. I.P. Khaitan is based on the information given to me by Mr. I.P. Khaitan and other CBI Vs. Ravi Kant Ruia and others Page 371 of 526 Essar group people. Volunteered:
Mr. I.P. Khaitan was himself participating in the negotiations and told that he owns STPL. It is wrong to suggest that I am introducing the name of Mr. I.P. Khaitan just to save the accused persons from legal punishment........."
The deposition of this witness matches with the evidence tendered by the prosecution witnesses relating to role of Sh. I. P. Khaitan and referred to in detail above. In the cross examination of this witness, there is nothing of any significance which could discredit the evidentiary value of his testimony.
391. PW 7 Sh. Ivan Tauro was an Officer of American Express Bank. He deposed that American Express Bank was acquired by Standard Chartered Bank in 2008. He deposed about the transaction of Rs. 254 crore between Essar Teleholdings Limited, Santa Trading (P) Limited, four companies of Sh. Rajeev Chandrasekhar, that is, Coimbatore Cablenet (P) Limited; Vectra Holdings (P) Limited; Epsilon Advisors (P) Limited; and Tayana Consultats and also Jupiter Capital Advisors Limited, also of Sh. Rajeev Chandrasekhar. As per his deposition, Jupiter Capital Advisors Limited transferred Rs. 150 crore and Rs. 104 crore to Essar Teleholdings Limited vide transfer instructions, Ex PW 7/F and 7/G (D381 and D382). ETHL transferred the amount to STPL vide cheque dated 16.07.2005, Ex PW 7/B (D379), for an amount of Rs. 170.50 crore and another cheque dated 16.07.2005, Ex PW 7/C (D380), for an amount of Rs. 83.50 crore. STPL transferred the amount to four companies of Sh. Rajeev Chandrasekhar, CBI Vs. Ravi Kant Ruia and others Page 372 of 526 referred to above, as mentioned in ledger Ex PW 7/A1. His deposition matches with the deposition of PW 43 Sh. Narottam B. Vyas that the credit was provided by Sh. Rajeev Chandrasekhar.
392. Even PW 40 Sh. Amit Kumar Gupta explained the transaction in his crossexamination dated 08.04.2013, page 6, which reads as under:
"........It is correct that during negotiations, it was decided that STPL would return this amount of Rs. 254 crore after it sold its shares of subsidiaries of BPL Communications Limited to Hutchison Essar Limited. It is correct that it was also decided once STPL sold its shares, it would return this amount to ETHL and ETHL would return it to Sh. Rajiv Chandra Shekhar group. It is correct that neither of the three parties involved namely STPL, ETHL and companies of Sh. Rajiv Chandra Shekhar group, were having liquidity to this tune at that time. It is correct that at that time, it was decided that all these companies would open their respective bank accounts in the same bank to ensure flow of the aforesaid amount. It is correct that three accounts were opened in American Express Bank, Mumbai in the name of ETHL, STPL and Jupiter Capital Advisors Private Limited, a company of Sh. Rajiv Chandra Shekhar for the aforesaid purpose. It is correct that all the three companies gave instructions together to the bank to ensure flow of the aforesaid amount.
Court Question: You have stated above that none of the three parties were having liquidity. In such a situation, how the flow of fund started initially, that is, from where the money came?
Answer: Since all the receiving and paying parties had accounts at the same branch and no party was to pay amounts exceeding what they were to receive under instruments banked simultaneously, the CBI Vs. Ravi Kant Ruia and others Page 373 of 526 payments could clear against the receipts without involving actual movement of cash.
It is correct that in effect Rs.254 crore was transferred from Jupiter Capital Advisors Private Limited to ETHL and from ETHL to STPL and from STPL to other four companies of Sh. Rajiv Chandra Shekhar. These transfers took place simultaneously. It is correct that technically Sh. Rajiv Chandra Shekhar provided credit of Rs.254 crore to ETHL and ETHL to STPL but in effect the transaction had the result of Sh. Rajiv Chandra Shekhar providing credit to STPL guaranteed by ETHL. It is correct that ETHL never intended to fund and in effect never funded the acquisition of aforesaid shares by STPL........"
This deposition matches with the record as transfer instructions Ex PW 7/F and 7/G were first issued by Jupiter Capital Advisors (P) Limited in favour of ETHL. Thus, the deposition of Sh. Amit Gupta that technically Sh. Rajeev Chandrasekhar provided the credit is correct.
393. DW 4 Sh. B. Sivakumar, General Manager, Essar Group, proved four vouchers, three dated 18.03.2005 and one dated 15.05.2004, Ex DW4 (A1)/X1 to X4. These vouchers show payment of Rs. 20 crore, Rs. 5 crore, Rs. 5 crore and Rs. 5 crore to Tayana Consultants (P) Limited, Vectra Holdings (P) Limited, Epsilon Advisors (P) Limited and Sooryasamudra Finance and Investment (P) Limited, on behalf of Khaitan group. He also proved ledger extracts of nine companies in the book of ETHL, Ex DW 4(A1)/X5 to X13, showing transactions in favour of companies of Sh. Rajeev Chandrasekhar on behalf of Khaitan group in 2005 and 2006.
CBI Vs. Ravi Kant Ruia and others Page 374 of 526394. DW 11 Sh. P. K. Bahri, Consultant to Sh. I. P. Khaitan deposed about acquisition of overseas shareholding of BPL Communications Limited by Sh. I. P. Khaitan. Relevant part of his examinationinchief dated 15.09.2014, pages 2 and 3, reads as under:
".........I negotiated prices along with Sh. I.P. Khaitan with the overseas investors. These overseas investors included AIG, CDC, TVG and AIDEC as well as French Telecom. These negotiations were conducted by Sh. I.P. Khaitan and by myself, some by way of conferences and some by personal visits. On negotiating the prices, the shares of all these five overseas investors were bought by Sh. I.P. Khaitan. Ques: When were the shares of AIG, TVG, CDC Group and AIDEC purchased?
Ans: AIG was finalized and purchased in December 2004 January 2005, CDC was finalized in March - April 2005 and TVG and AIDEC were finalized in April 2006.
After we finalized with AIG and CDC, TVG and AIDEC held out for a higher price, which at that stage, we were not willing to pay. In early 2006 when the licences were being sold to Hutchison Essar, both TVG and AIDEC threatened to block the share and freeze the accounts of BPL Communications Limited. Having met them before, we decided to reengage with them to try and arrive at a solution. We offered them roughly about 50% more than was offered to other two entities and thereafter a deal was arrived at and we bought their share also........."
The witness categorically deposed that he had negotiated the purchase of overseas shareholding on behalf of Sh. I. P. Khaitan. It is instructive to take note of his cross examination also, which reads as under:
CBI Vs. Ravi Kant Ruia and others Page 375 of 526"........I do not remember the name of other subsidiary of BPL Communications Limited. I joined the Khaitan group of Sh. I.P. Khaitan in June 2012. Sh. I.P. Khaitan group is operating in various fields including mines, investments, telecommunication and trading. It has numerous companies in its group including Interface Transworld, which is operating in mining field. I do not remember the name of other companies. The I.P. Khaitan group was not involved in telecommunication at the time of purchase of the shares of the aforesaid overseas investors. I simply negotiated the purchase price. I do not know as to what was the understanding of Sh. I.P. Khaitan with Ruias. Mr. Humma negotiated on behalf of AIG, Mr. Stephen Endley negotiated on behalf of CDC, Mr. Ed Stephel negotiated on behalf of TVG and Mr. Oliver and Mr. Jean Francois Joecquim negotiated on behalf of French Telecom.
I know nothing beyond price negotiations."
His crossexamination is relevant from two angles. First, he deposed that Khaitan group is operating in the field of mines, investment, telecommunication and trading. This shows that Khaitan group is not a nonentity but a group of means. Second, he also disclosed the names of persons with whom he had negotiated the purchase of overseas shareholding.
Thus, all the witnesses have deposed that BPL group of companies, that is, BPL Communications Limited and its subsidiaries, BPL Mobile Communication Limited and BPL Mobile Cellular Limited, were purchased by Sh. I. P. Khaitan. It is also in evidence that Sh. I. P. Khaitan is a man of means. In the face of such copious evidence it cannot be said that Sh. I. P. Khaitan was a front or benami for Essar group for purchase of CBI Vs. Ravi Kant Ruia and others Page 376 of 526 BPL group of companies.
In an authority reported as Jaydayal Poddar (Deceased) through LRs and Another Vs. Mst. Bibi Hazra and Others, (1974) 1 SCC 3, Hon'ble Supreme Court while dealing with the question of Benami, observed in paragraphs 6 and 14 as under:
"6. It is well settled that the burden of proving that a particular sale is benami and the apparent purchaser is not the real owner, always rests on the person asserting it to be so. This burden has to be strictly discharged by adducing legal evidence of a definite character which would either directly prove the fact of benami or establish circumstances unerringly and reasonably raising an inference of that fact. The essence of a benami is the intention of the party or parties concerned; and not unoften, such intention is shrouded in a thick veil which cannot be easily pierced through. But such difficulties do not relieve the person asserting the transaction to be benami of any part of the serious onus that rests on him; nor justify the acceptance of mere conjectures or surmises, as a substitute for proof. The reason is that a deed is a solemn document prepared and executed after considerable deliberation, and the person expressly shown as the purchaser or transferee in the deed, starts with the initial presumption in his favour that the apparent state of affairs is the real state of affairs. Though the question, whether a particular sale is benami or not, is largely one of fact, and for determining this question, no absolute formulae or acid test, uniformly applicable in all situations, can be laid down; yet in weighing the probabilities and for gathering the relevant indicia, the Courts are usually guided by these circumstances: (1) the source from which the purchase money came; (2) the nature and possession of the property, after the purchase; (3) CBI Vs. Ravi Kant Ruia and others Page 377 of 526 motive, if any, for giving the transaction a benami colour; (4) the position of the parties and the relationship, if any, between the claimant and the alleged benamidar ; (5) the custody of the titledeeds after the sale and (6) the conduct of the parties concerned in dealing with the property after the sale.
14. No evidence whatever was led to show that there was any motive or reason for giving a benami character to the transaction. Abdul Karim who had special knowledge of the circumstances bearing on such motive, if any, did not say a word on this point. There was not even an oblique suggestion that Abdul Karim was heavily under debt and in order to avoid payment of such debts, he thought it fit to acquire the house in the name of his wife."
Similarly, in Marcel Martins Vs. M. Printer and Others, (2012) 5 SCC 342, Hon'ble Supreme Court while dealing with question of benami in a case in which ostensible owner had also paid part consideration observed in paragraphs 19 and 20 as under:
"19. We do not find any error much less any perversity in the view taken by the High Court nor do we see any miscarriage of justice to warrant interference with the finding that the sale consideration for the purchase of the suit property was contributed by the plaintiffs and the defendant and not provided by the defendant alone as claimed by him. We have, therefore, no hesitation in upholding the said findings which is at any rate a pure finding of fact.
20. On the second question the High Court relied upon the principles underlying Section 45 of the Transfer of Property Act, 1882, apart form holding CBI Vs. Ravi Kant Ruia and others Page 378 of 526 that the purchase of the suit property in the name of the appellant by contributions made by the remaining legal representatives and the original owner, did not amount to a benami transaction. The High Court held that if a part of the consideration paid for the property in dispute had been provided by the appellant in whose name the property was purchased, the transaction could not be said to be a benami transaction."
As per prosecution case itself, Sh. I. P. Khaitan purchased 16.6% shares of BPL Communications Limited from his own funds. He has also made other contributions also, as already noted above.
Motive
395. It is the case of the prosecution that Essar group acquired BPL companies in the name of Sh. I. P. Khaitan so that it can run telecom business after exiting Vodafone Essar Limited. It is the case of the prosecution that this was the motive for Essar group to acquire these companies.
However, thirteen officers of DoT have been examined as witnesses in the instant case. Also chief investigating officer PW 94 Sh. Vivek Priyadarshi and four other investigating officers were examined as witness, that is, PW 85 Inspector Shyam Prakash, PW 87 Dy. SP Rajesh Chahal, PW 91 Dy. SP S. K. Sinha and PW 93 Dy. SP V. M. Mittal, by the prosecution. None of these witnesses deposed even a word that this was the motive of I. P. Khaitan and Kiran Khaitan becoming benami/ front of Essar Group. In the absence of evidence, direct or circumstantial, it cannot be said that Sh. I. P. Khaitan and Ms. CBI Vs. Ravi Kant Ruia and others Page 379 of 526 Kiran Khaitan were acting as front for Essar group. On the contrary, there is evidence on record that the motive of Sh. I. P. Khaitan and Ms. Kiran Khaitan and Essar group for acquiring BPL companies was to sell these companies to HEL and earn profit out of it. There is no evidence that these persons wanted to operate the BPL companies on their own.
Thus, there is no material on record to indicate that BPL group of companies were purchased by Essar group in the name of Sh. I. P. Khaitan and Ms. Kiran Khaitan and they were being used as a front in violation of clause 8 of UASL Guidelines dated 14.12.2005. Thus, motive remains in the realm of suspicion. In an authority reported as State of UP Vs. Dr. Sanjay Singh and Another, 1994 Supp (2) SCC 707, Hon'ble Supreme Court observed in paragraphs 17 and 18 about motive as under:
"17. The circumstantial evidence even if accepted in its entirety, as pointed out by the courts below creates only a suspicion of motive. Needless to point out that the motive which induces a man to do any particular act is known to him and to him alone.
18. At the highest, the prosecution can only suggest from the circumstances what is or may be the motive for any particular act. However, motive qua non for bringing the offence of is not a sine murder or of any crime home to the accused. At the same time the absence of ascertainable motive comes to nothing, if the crime is proved to have been committed by a sane person but to eke out a case by proof of a motive alone - that too suspicion of motive - apparently tending towards any possible crime, is not only a very unsatisfactory but also a CBI Vs. Ravi Kant Ruia and others Page 380 of 526 dangerous process, because circumstances do not always lead to particular and definite inferences and the inferences themselves may sometimes be erroneous."
Payment of Consideration
396. The case of the prosecution is that for purchase of shares of Sh. Rajeev Chandrasekhar, Rs. 304 crore was provided by companies of Essar group. It is the case of the prosecution that for purchasing equity held by ICICI Bank, Rs. 80 crore was also provided by Millennium Growth and Development Fund, managed by companies of Essar group. It is the case of the prosecution that when the funding was provided by Essar group for purchase of BPL companies, the purchase of companies must be deemed to be done by Essar group, though the name of Khaitan was used. It is the case of the prosecution that Sh. I. P. Khaitan was just a front.
On the other hand, defence denied it submitting that Rs. 254 crore was a credit provided by Sh. Rajeev Chandrasekhar himself as he wanted to give a closure to the transaction. It is also the case of the defence that Rs. 80 crore was a loan provided by an independent investment fund, that is, Millennium Growth and Development Fund. It is the case of the defence that even if the money was provided by Essar group, the purchase of BPL companies was by Sh. I. P. Khaitan and consideration can be provided by the purchaser or anyone at his instance. My attention has been invited to Section 2(d) of the Indian Contract Act.
Section 2(d) of Indian Contract Act reads as under:
CBI Vs. Ravi Kant Ruia and others Page 381 of 526"(d) When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise;"
Thus, consideration may be paid by the purchaser or anyone on his behalf. In the instant case even if the prosecution case is accepted that Rs.304 Crore was provided by Essar group for payment to Sh. Rajiv Chandrasekhar and Rs.80 Crore to ICICI Bank, even then there is evidence on record that all these events were happening at the instance of Sh. I. P. Khaitan. From the evidence, referred to above in detail, it is clear that intention of the parties was that Sh. I. P. Khaitan was purchasing the BPL companies. The payment, even if made by the Essar group, it was made at the desire of the purchaser, that is, Sh. I. P. Khaitan. It may be noted that it is the prosecution witnesses who deposed that BPL companies were purchased by I. P. Khaitan. The standard of proof required for an accused was noted by the Hon'ble Supreme Court in an authority reported as M. S. Narayana Menon @ Mani Vs. State of Kerala and Another, (2006) 6 SCC 39, wherein paragraphs 46 and 47 read as under:
"46. In Harbhajan Singh v. State of Punjab this Court while considering the nature and scope of onus of proof which the accused was required to discharge in seeking the protection of Exception 9 to Section 499 of the Penal Code, stated the law as under:
(SCR pp. 242 H243 A) "In other words, the onus on an accused CBI Vs. Ravi Kant Ruia and others Page 382 of 526 person may well be compared to the onus on a party in civil proceedings, and just as in civil proceedings the court trying an issue makes its decision by adopting the test of probabilities, so must a criminal court hold that the plea made by the accused is proved if a preponderance of probability is established by the evidence led by him."
47. In V. D. Jhingan v. State of Uttar Pradesh it was stated: (SCR p. 739 H) "It is well established that where the burden of an issue lies upon the accused he is not required to discharge that burden by leading evidence to prove his case beyond a reasonable doubt."
(See also State of Maharashtra v. Wasudeo Ramchandra Kaidalwar ) ."
In view of the above discussion, it is clear that evidence is to the effect that BPL companies were purchased by Sh. I. P. Khaitan. Prosecution has thus failed to prove that BPL companies were purchased by Essar group and later on used them for applying for 21 UAS licences.
D. Transfer of STPL and Loop Telecom Limited and Filing of Applications for UASL. Who is responsible for filing the applications?
Transfer of STPL by Sh. Saket Agarwal to Khaitans
397. It is the case of the prosecution that Atul Bhagwat Trading (P) Limited, later on Santa Trading (P) Limited, was transferred by Sh. Saket Agarwal and his brother to Ms. Kiran Khaitan and Sh. I. P. Khaitan, pursuant to conspiracy, to illegally obtain 21 UAS licences from DoT.
On the other hand, the submission of defence is that CBI Vs. Ravi Kant Ruia and others Page 383 of 526 it was a plain and simple gift by Sh. Saket Agarwal and his brother to Ms. Kiran Khaitan, who is the real sister of their mother.
Let me take note of the evidence on record. PW 21 Sh. Saket Agarwal, who was once a director in STPL, deposed about its transfer to Kiran Khaitan, in his examinationinchief, pages 2 to 5, as under:
About acquisition of STPL ".......I am acquainted with a company by the name of Santa Trading (P) Limited (STPL). My brother and myself acquired this company from a chartered accountant in the year 2003. The company was having 10,000 shares of Rs. 10/ each and all of them were held by us after its acquisition. This company was acquired by us for purchasing flats.
About transfer to Ms. Kiran Khaitan This company is no longer with us. I gifted this company to my 'Mausi' Ms. Kiran Khaitan. Her husband Sh. I. P. Khaitan wanted a company for his business and he asked me for a company. This company was free as no investment was made by the company anywhere by that time, so we gifted this company to my 'mausi' Ms. Kiran Khaitan. The discussion regarding this company being gifted to Ms. Kiran Khaitan took place in the year 2004 through a gift letter. Subsequently we transferred all the 10,000 shares in the names of Ms. Kiran Khaitan and Sh. I. P. Khaitan.
I have been shown a letter dated 30.04.2005 (D347), through which I intimated Ms. Kiran Khaitan regarding the gifting of shares of aforesaid company to them. It bears my signature at point A and the same is now Ex PW 21/A. My 'Mausi' Ms. Kiran Khaitan accepted the gift by appending her signature on this letter at point B and recording the word "accepted". Similarly, my brother Sh. Rishi CBI Vs. Ravi Kant Ruia and others Page 384 of 526 Agarwal also wrote a similar letter of the even date to her regarding gifting his shares to her and the letter bears his signature at point A, which I identify and the same is now Ex PW 21/B. My 'Mausi' Ms. Kiran Khaitan accepted the gift by appending her signature on this letter at point B and recording the word "accepted".
On acquisition of the aforesaid company by us from the chartered accountants Sh. Atul and Sh. Anil, my brother and myself were appointed directors thereof. It is correct that after the company was acquired by us from the chartered accountants and before it was actually transferred to Mr and Mrs. Khaitan, as the process of transfer took sometime, two more directors were appointed on the board of the company, but I am unable to recall their names now. I know Sh. B. Shivakumar and Sh. S. Shankarnarayanan. It is these two persons who came on the board of this company before its transfer could actually be effected in the name of Mr. and Mrs. Khaitan. They came on the board of the company in June 2004, though I am not sure. Both of them were employees of Essar group at the time of their coming on the board of this company. I gifted the company in the year 2004, transferred my shares in the name of Khaitans in 2005 and resigned from the board in 2005 itself. After our gifting the company to Mr. and Mrs. Khaitan, they used to take all decisions for and on behalf of the company. Before my resignation from the board of the directors, I used to attend the board meetings despite the fact of gifting of company and I used to know about the decisions taken by the board. In case of my nonattendance in any board meeting, I did not come to know as to what decisions were taken by the board.
I have been shown register of minutes of board meetings of STPL w.e.f 18.08.2005 to 07.02.2008 (D21). I identify this register as that of STPL and the same is collectively Ex PW 21/C. I have been CBI Vs. Ravi Kant Ruia and others Page 385 of 526 shown minutes of board meeting held on 02.06.2005 and in that meeting my brother Sh. Rishi Agarwal, Sh. Shankarnarayanan, Sh. B. Shivakumar and myself have been shown present. Sh. S. Shankarnarayanan presided over the board meeting.
In this board meeting, Sh. S. Shankarnarayanan and Sh. B. Shivakumar tendered their resignations from the board and the same were accepted. After their resignations, only two directors were left. Sh. S. Shankarnarayanan continued to preside over the meeting as the resolution regarding resignation came into effect after the meeting was over. When the resolutions as mentioned in the minutes, items no. 3 to 11, were passed, all four directors continued to be present in the meeting. The minutes have been signed by Sh. S. Shankarnarayanan at point A as chairman of the meeting. These minutes are now Ex PW 21/C1. I identify his signature.
I have been shown minutes of the next board meeting held on 30.06.2005 and this meeting was attended by my brother and myself as directors. In this meeting, Ms. Kiran Khaitan and Sh. I. P. Khaitan were appointed on board of the company and resignations were tendered by Sh. Rishi Agarwal and myself. My brother Sh. Rishi Agarwal presided over the meeting and signed the minutes at point A as chairman on 30.06.2005 itself. I identify his signature. The minutes are now Ex PW 23/C2. Thereafter, I had nothing to do with this company......"
PW 21 in his crossexamination, pages 8 and 9, further deposed about transfer of company to I. P. Khaitan as under:
".......I gifted the shares of STPL to Ms. Kiran Khaitan only on the request of Mr. I. P. Khaitan. I do not know if Sh. I. P. Khaitan told me that he wanted to invest in telecom business, as I had no interest in the company. I do not remember even after looking at CBI Vs. Ravi Kant Ruia and others Page 386 of 526 item no. 5 of board minutes dated 02.06.2005, already Ex PW 21/C1, that the resolutions were being passed at the instance of Sh. I. P. Khaitan.
It is correct that Sh. B. Shivakumar and Sh. S. Shankarnarayanan were appointed on the board of STPL on the request of Sh. I. P. Khaitan......."
Thus, he deposed that STPL was transferred to Kiran Khaitan. He also deposed that Sh. S. Shankarnarayanan and Sh. B. Sivakumar were appointed directors on the request of I. P. Khaitan. Sh. S. Shankarnarayanan was examined as PW 49 and Sh. B. Sivakumar was examined as DW 4. Both deposed that they were working for Sh. I. P. Khaitan.
In this deposition, there is nothing of any significance from which anything wrong can be inferred.
Appointment of Essar Personnel on Board of STPL
398. It is the case of the prosecution that personnel of Essar group were appointed on the board of STPL and this is indicative of conspiracy.
On the other hand, defence argued that this was done as Sh. I. P. Khaitan desired to enter telecom sector, but was not having competent personnel available to him in India.
Let me take note of evidence on record.
399. PW 14 Sh. Adil Malia, Group President (HR), Essar Group, in his crossexamination pages 6 and 7, deposed as to how companies of Essar group work. His deposition reads as under:
"........Decision making of each company, which forms part of business vertical of Essar group, vests CBI Vs. Ravi Kant Ruia and others Page 387 of 526 with respective board of directors. If multiple companies are involved, the decision is required to be approved at different levels. Unless an employee is authorized by board of directors, he is not to take any decision on behalf of the company. If more than one company of Essar group is involved in a particular matter, no single person is authorized to take decision of behalf of these companies.
For every company of Essar group, there is either an HR head or a person responsible for HR activities. These HR heads report to Chief Executive Officer of their respective companies and also to me. I do not know as to who were the HR heads of Loop Telecom Limited and Loop Mobile (India) Limited and, as such, there is no question of their reporting to me.
As Group President (HR), I was looking after the recruitment of senior level persons also like CEOs and CFOs and this include interviewing the prospective candidate. I never conducted interview of any managerial level employee of Loop Telecom Limited and Loop Mobile (India) Limited.
It is correct that from time to time, several employees of Essar group held directorship in the companies belonging to relatives of Ruia family. Their compensation used to be paid by Essar companies. Similarly, employees of Essar group are also deputed to the companies held by relatives of Ruia family and in such case also compensation is paid by Essar group company. The reason for this payment is that they continue performing duties with Essar group companies and only a small amount of work is done with the companies of relatives of Ruia family.
Loop Telecom Limited and Loop Mobile (India) Limited were not represented on People's Committee or any other committee named by me in my statement above. It is correct that Loop Telecom Limited and Loop Mobile (India) Limited were not Essar group companies.........."CBI Vs. Ravi Kant Ruia and others Page 388 of 526
This deposition makes it clear that no one person can singly be held responsible for a particular act in Essar group as a decision is usually joint, taken in consultation with several others. He also deposed that there is nothing unusual in employees of Essar group working as directors in the companies of relatives of Ruia family. This deposition was not challenged by the prosecution. He also deposed that Loop Telecom Limited and Loop Mobile (India) Limited were not companies of Essar group.
Transfer of Shipping
Stop Dot Com (India) (P) Limited to
Khaitans
400. It is the case of the prosecution that Shipping Stop Dot Com (India) (P) Limited was a company of Essar group and continued to be a company of Essar group. It is the case of the prosecution that transfer of this company was a mere formality and it continued to be under the control of Essar group as personnel from Essar were on the board of the company. It is the case of the prosecution that this device was used by the Essar group to illegally obtain 21 UAS licences in violation of Clause 8.
On the other hand, defence submitted that though some of the personnel were initially working for Essar group, but when they were deputed to Loop Telecom Limited, they were working under the directions of Sh. I. P. Khaitan. It is the case of the defence that the company stood transferred de jure CBI Vs. Ravi Kant Ruia and others Page 389 of 526 and de facto to Sh. I. P. Khaitan and he was in its control. It is the case of the defence that once the company was transferred to BPL Communications Limited, a company of Sh. I. P. Khaitan, Essar group had no link with it.
Let me take note of the evidence on record.
401. PW 49 Sh. S. Shankarnarayanan was a Director in STPL as well as Karthik Financial Services Limited. In his examinationinchief dated 13.02.2013, page 2, he deposed as under:
"......In the year 2005, I was on the board of directors of Santa Trading (P) Limited, earlier known as Atul Bhagwat Trading (P) Limited, Ipsha Commercial (India) (P) Limited, Essar Energy Jamnagar (P) Limited, Shipping Stop Dot Com (India) (P) Limited, and some other companies also, names of which I do not remember now.
In the year 2006 also, I was on the board of directors of various Essar group companies including Essar Energy Jamnagar (P) Limited, Karthik Financial Services Limited and other companies......"
PW 49 Sh. S. Shankarnarayanan in his further examinationinchief, pages 3 to 5, deposed about transfer of Atul Bhagwat Trading Private Limited, later on STPL, to Kiran Khaitan as under:
About change of name ".......I have been shown minutes of board meetings of Atul Bhagwat Trading (P) Limited, subsequently Santa Trading (P) Limited, D21, for the period 18.04.2005 to 07.02.2008, already Ex PW 21/C. In this register, I have been shown minutes of board meetings held on 18.04.2005, wherein I was also present as director alongwith other director Sh. B. CBI Vs. Ravi Kant Ruia and others Page 390 of 526 Shivkumar. The meeting was chaired by me. These minutes have been signed by me at point A and are now Ex PW 49/A. In this meeting, it was resolved to call extra ordinary general meeting of the company, to change the name of the company from Atul Bhagwat Trading (P) Limited to Santa Trading (P) Limited as the ROC had intimated that this name was available for adoption by a company.
About transfer of shareholding to Ms. Kiran Khaitan I have been shown minutes of the board meeting held on 02.05.2005, wherein I was also present at that meeting alongwith Sh. B. Shivkumar. The meeting was chaired by me. These minutes have been signed by me at point A and are now Ex PW 49/B. In this meeting, it was resolved to issue duplicate share certificates to Saket Agarwal and Rishi Agarwal. It was also resolved to transfer total shares of Saket Agarwal and Rishi Agarwal to Kiran Khaitan. It was also resolved to alter the capital clause in the memorandum of association to increase the authorized share capital of the company from Rs. One lac to Rs. Ten crore. It was also resolved to alter the articles of association of company putting a restriction on it against accepting any public deposit except from members, directors and their relatives. It was also resolved to call extra ordinary general meeting of the company.
I have also been shown minutes of the board meeting of Santa Trading (P) Limited, held on 25.05.2005, wherein myself and Sh. B. Shivkumar were present as directors. The meeting was chaired by me. The minutes have been signed by me at point A and now Ex PW 49/C. In this meeting it was resolved to open a bank account with American Express Bank to be operated by Sh. Rohit Dave singly and also to open an National Stock Depository Limited (NSDL) Demat account to be operated by him singly.
CBI Vs. Ravi Kant Ruia and others Page 391 of 526Resignations and issue of NCDs I have also been shown minutes of the board meeting of STPL held on 02.06.2005, which was attended by me, Sh. B. Shivkumar, Sh. Rishi Agarwal and Sh. Saket Agarwal. The meeting was chaired by me. The minutes have been signed by me at point A and the minutes are already Ex PW 21/C1. In this meeting, resignation of myself and Sh. B. Shivkumar was approved. It was also resolved to acquire shares in BPL Communications Limited as per assignment made by Essar Teleholdings Limited. It was also resolved to acquire 35 crore equity shares from Epsilon Advisors (P) Limited. The issue of non convertible debentures of Rs. 304 crore by the company was also resolved and their terms and conditions were approved of. The accounts for the year ending on 31.03.2005 were also approved.
The instructions to approve the transfer of shares from Saket Agarwal and Rishi Agarwal to Kiran Khaitan came from Saket Agarwal and Rishi Agarwal themselves. The transfer deeds of the shares were handed over to me by Saket Agarwal for being placed before the board and I accordingly placed the same before the board and board approved the transfer. I know Sh. N. B. Vyas, who was my official superior. The transfer deeds were sent by Saket Agarwal and Rishi Agarwal to the office of the company and not to me directly. The transfer of shares was listed as an item of the agenda."
PW 49 Sh. S. Shankarnarayanan in his cross examination, pages 5 and 6, also deposed about transfer of STPL to Kiran Khaitan as under:
"It is correct that Sh. Saket Agarwal and Sh. Rishi Agarwal are nephews (Bhanjas) of Sh. Ravi Ruia. It is also correct that Kiran Khaitan is sister of Ravi Kant Ruia and, as such, masi (mother's sister) of CBI Vs. Ravi Kant Ruia and others Page 392 of 526 Saket Agarwal and Rishi Agarwal. It is correct that when I joined the board of STPL, it was in the process of being transferred to Ms. Kiran Khaitan. I joined the board of STPL only for completing the secretarial work, as I have vast experience of this field. After my joining the board of STPL, I used to take instructions only from Sh. I. P. Khaitan.
I have been shown the board minutes of the meeting held on 02.06.2005, already Ex PW 21/C1, and in these minutes, the decisions which have been recorded at items No. 4 to 7 were taken at the instance of Sh. I. P. Khaitan.
When I joined the board of Karthik Financial Services Limited in the year 2006, it was an Essar group company. It continued to be so till 2011, till I remained on its board......"
Thus, while on the board of STPL, he used to take instructions from Sh. I. P. Khaitan.
402. PW 49 Sh. S. Shankarnarayanan in his further cross examination, pages 6 to 8, deposed about transfer of Shipping Stop Dot Com (India) Private Limited, later on Loop Telecom Limited, to BPL Communications Limited as under:
".......I have been shown the register containing the minutes of board meetings of Karthik Financial Services Limited, already Ex PW 18/B (D23), and therein are the minutes of the meeting held on 19.07.2007. In this meeting I was also present. The meeting was chaired by Sh. Girish Sathe and the minutes have also been signed by him at point A, which I identify. These minutes are now Ex PW 49/DA. In this meeting, it was resolved to sell Shipping Stop Dot Com (India) (P) Limited to BPL Mobile Communications Limited and the proposal for this came from Sh. Girish Sathe, other director and chairman of the meeting, as Karthik Financial Services Limited was owning Shipping Stop Dot CBI Vs. Ravi Kant Ruia and others Page 393 of 526 Com (India) (P) Limited. As per these minutes, Shipping Stop Dot Com (India) (P) Limited was in possession of an NLD licence issued by Department of Telecommunications and for obtaining it, the company had paid an amount of Rs. 2.5 crore as licence fee. In the meeting, the demand from DoT of a guarantee of Rs. Twenty crore was also discussed, but this is not recorded in the minutes. At that time, Shipping Stop Dot Com (India) (P) Limited was not operating the NLD licence. The company was inactive as it was not conducting any business. The reasons for selling were that Karthik Financial Services Limited would get its Rs. 2.5 crore back and would also avoid the demand of Rs. Twenty crore as were being made by DoT and accordingly, the board took the decision itself to sell the company. At that time, the board was aware that BPL Communications Limited, the buyer company, was owned by I. P. Khaitan. Though the decision was taken 19.07.2007, but implementation of decision took sometime as some formal approvals were required.
Court Ques: In the meeting held on 19.07.2007, Sh. B. Shivkumar, Sh. Girish Sathe and yourself were present as directors. Were all three of you employee directors?
Ans: That is correct.
Court Ques: Whether employee directors are competent to take as crucial a decision as to sell a company on their own as it was not an operational decision but a strategic decision?
Ans: This decision was taken by the Chief Financial Officer of the sector, that is, telcom sector, and was conveyed to the board and board accordingly passed the resolution.
Despite the decision of the CFO, the board independently decided to sell the company. On the decision to sell Shipping Stop Dot Com (India) (P) Limited to BPL Communications Limited being taken, the board of Shipping Stop Dot Com (India) CBI Vs. Ravi Kant Ruia and others Page 394 of 526 (P) Limited comprised of Sh. Madan Mundra and Sh. V. Ganesan was informed about this. Following the decision taken in the meeting held on 19.07.2007, the books of the company were handed over to T. Sathisan, head of finance of BPL Communications Limited."
Thus, the witness reaffirmed that Shipping Stop Dot Com (India) (P) Limited was transferred to BPL Communications Limited and he used to take instructions from I. P. Khaitan. This version of the witness was not challenged by the prosecution. In an authority reported as Raja Ram Vs. State of Rajasthan, (2005) 5 SCC 272, Hon'ble Supreme Court while dealing with such a situation observed in paragraphs 7 to 9, as under:
"7. But the difficulty in this case is that the dying declaration cannot survive scrutiny due to certain broad circumstances. The first circumstance is the testimony of the father of Rameshwari Devi who was examined as PW 6. He said that one Khajan Chand (PW 5) who was a neighbour was impressing upon the deceased while she was in burnt condition that she should not tell the authorities that she herself poured kerosene and set herself ablaze as that would land her in prosecution proceedings against her. Instead she was advised to put the blame on the husband and his parents as a way out to rescue herself. As the Public Prosecutor treated PW 6 hostile the trial court and the High Court rightly declined to place reliance on his testimony.
8. But PW 4 Subhash Chander, another neighbour, who too was present when Rameshwari Devi was removed to the hospital had also testified to the same position as PW 6 said. Of course, he was also treated as hostile by the prosecution and, therefore, CBI Vs. Ravi Kant Ruia and others Page 395 of 526 he was also placed on the same position of reliability as PW 6.
9. But the testimony of PW 8 Dr. Sukhdev Singh, who is another neighbour, cannot easily be surmounted by the prosecution. He has testified in very clear terms that he saw PW 5 making the deceased believe that unless she puts the blame on the appellant and his parents she would have to face the consequences like prosecution proceedings. It did not occur to the Public Prosecutor in the trial court to seek permission of the court to heard ( sic declare) PW 8 as a hostile witness for reasons only known to him. Now, as it is, the evidence of PW 8 is binding on the prosecution. Absolutely no reason, much less any good reason, has been stated by the Division Bench of the High Court as to how PW 8's testimony can be sidelined."
This view was also reiterated in a case reported as Javed Masood and Another Vs. State of Rajasthan, (2010) 3 SCC 538, wherein Hon'ble Supreme Court observed in paragraphs 20 and 21 as under:
"20. In the present case the prosecution never declared PWs 6, 18, 29 and 30 "hostile". Their evidence did not support the prosecution. Instead, it supported the defence. There is nothing in law that precludes the defence to rely on their evidence.
21. This Court in Mukhtiar Ahmed Ansari v. State (NCT of Delhi) observed: (SCC pp. 27071, paras 3031) "30. A similar question came up for consideration before this Court in Raja Ram v. State of Rajasthan . In that case, the evidence of the doctor who was examined as a prosecution witness showed that the deceased was being told by one K that she CBI Vs. Ravi Kant Ruia and others Page 396 of 526 should implicate the accused or else she might have to face prosecution. The doctor was not declared 'hostile'. The High Court, however, convicted the accused. This Court held that it was open to the defence to rely on the evidence of the doctor and it was binding on the prosecution.
31. In the present case, evidence of PW 1 Ved Prakash Goel destroyed the genesis of the prosecution that he had given his Maruti car to the police in which the police had gone to Bahai Temple and apprehended the accused. When Goel did not support that case, the accused can rely on that evidence."
The proposition of law stated in the said judgment is equally applicable to the facts in hand."
This authority applies with full force to the instant case.
403. In board meeting of BPL Mobile Communications Limited held on 01.09.2007, it was decided to acquire 100% equity stake in Shipping Stop Dot Com (India) Private Limited in order to apply for telecom licences. This meeting was attended by PW 56 Sh. Ajay Madan and PW 61 Sh. S. Subramaniam as directors. This meeting was also attended by one Sh. T. K. Mukhopadhyay, PW 46 Sh. T. Sathisan and PW 57 Sh. Jayan Dsouza by invitation. The minutes of this meeting are Ex PW 46/D1 (D16). Item No. 4 of the minutes relates to acquisition of equity stake of Shipping Stop Dot Com (India) Private Limited and reads as under:
"4. ACQUISITION OF 100% EQUITY STAKE IN SHIPPINGSTOP DOT COM (INDIA) PRIVATE LIMITED CBI Vs. Ravi Kant Ruia and others Page 397 of 526 Mr. S. Subramaniam informed the Board that TRAI has come out recommendations on licensing and spectrum policy. If accepted and implemented by DoT, spectrum should be available on a first come first serve basis to new entrants particularly those who are already operating in some circles. BPL Mobile, in line with the policy of value enhancement to stakeholders would like to seize the above opportunity and has proposed to acquire 100% Equity Stake in Shippingstop Dot Com (India) Private Limited from Karthik Financial Services Limited at book value of Rs.5.6 Crores.
He further informed that Shippingstop Dot Com (India) Private Limited has National Long Distance (NLD) License issued by Department of Telecommunications (DoT), Government of India.
Further, post acquisition, the Company has proposed to apply to DoT for Unified Access Service License (UASL) for 21 Telecom Circles through this subsidiary immediately so that BMCL have a strategic roadmap for growth and derive economies of scale by enlarging the footprint in this highly competitive market.
Dr. T. K. Mukhopadhyay has advised that, the Company should communicate such acquisition to the CDR Cell and inform all the concerned Financial Institutions. The Board considered the same and adopted the following resolution unanimously:
RESOLVED THAT in accordance with sections 292, 372A and all other applicable provisions of the Companies Act, 1956, consent of the Company be and is hereby accorded for the acquisition of 51,50,000 equity shares of Rs.10/ each (constituting 100% equity stake) in Shippingstop Dot Com (India) Pvt. Ltd. ("Shippingstop") from Karthik Financial Services Ltd. (KFSL) at total price consideration of Rs. 5,66,50,000/ CBI Vs. Ravi Kant Ruia and others Page 398 of 526 RESOLVED FURTHER THAT Mr. Vikash Saraf or Mr. S. Subramaniam or Mr. Prem Rajani or Mr. Ajay Madan, Directors of the Company and/or Shri Durgesh S. Dingankar, Company Secretary be and are hereby severally authorized to negotiate, finalise, settle and convey the acceptance of the Company for the purchase of the aforesaid equity shares at the price stated hereinabove and other terms and conditions as may be mutually decided by the Company and KFSL.
RESOLVED FURTHER THAT aforesaid persons be and are hereby authorised to sign and execute all relevant documents, papers and writings and to do all such acts, deeds and things as may be necessary or expedient in this regard."
In an authority reported as M.S. Madhusoodhanam and Another Vs. Kerala Kaumudi (P) Ltd and Others, (2004) 9 SCC 204, dealing with the minutes of meeting of a company, Hon'ble Supreme Court observed in paragraph 47 as under:
"Furthermore, under Section 194 of the Companies Act, 1956, the minutes of the meetings kept in accordance with the provisions of Section 193 shall be evidence of the proceedings recorded therein and unless the contrary is proved it shall be presumed under Section 195 that the meeting of the Board of Directors was duly called and held and all proceedings thereat to have taken place........"
Section 194 of the Companies Act, 1956 reads as under:
"Minutes to be evidence. Minutes of meetings kept in accordance with the provisions of section 193 shall be evidence of the proceedings recorded therein."CBI Vs. Ravi Kant Ruia and others Page 399 of 526
Thus, the aforesaid minutes are deemed to be correct in the eyes of law, but the prosecution by arguments across the bar tried to discredit them without citing any supporting evidence.
404. PW 58 Sh. Girish K. Sathe, who was one of the directors in Karthik Financial Services Limited, in his cross examination dated 04.06.2013, pages 19 to 21, deposed about transfer of Shipping Stop Dot Com (India) Private Limited to I. P. Khaitan as under:
About acquisition of Shipping Stop Dot Com (India) (P) Limited by Sh. I. P. Khaitan ".......I have been shown minutes book of Karthik Financial Services Limited, already Ex PW 18/B (D23), wherein I have been shown minutes of the board meeting held on 19.07.2007, already Ex PW 49/DA. I was present in this meeting and presided over it. It is correct that as per these minutes, item No. 3, Karthik Financial Services Limited was holding 100% shares of Shipping Stop Dot Com (India) (P) Limited, though one share was held by its nominee. It is correct that before and in July 2007, it was a nonoperational company. It is also correct that it was having nonoperational NLD licence from DoT and small investments.
It is correct that Sh. I. P. Khaitan approached me for purchasing Shipping Stop Dot Com (India) (P) Limited, though he approached me through Sh. Ganesan, who used to work in my department, but would assist Sh. I. P. Khaitan. It is correct that Sh. I. P. Khaitan told me that he wanted NLD licence held by this company as well as to apply for 21 UAS licences through this company. It is correct that since I. P. Khaitan was relative of Ravi Kant Ruia, the board of Karthik Financial Services Limited took the decision to sell Shipping Stop Dot Com (India) (P) CBI Vs. Ravi Kant Ruia and others Page 400 of 526 Limited to him. Volunteered : The decision was actuated as Shipping Stop Dot Com (India) (P) Limited was a dormant company.
About earlier business of Shipping Stop Dot Com (India) (P) Limited It is correct that Shipping Stop Dot Com (India) (P) Limited paid a sum somewhere between Rs. Two to three crore to the DoT for obtaining NLD licence, but I am unable to recall if the exact amount paid was Rs. 2.5 crore. It is correct that since the NLD licence was nonoperational, DoT was asking for a performance guarantee of Rs. 20 crore. I do not know if the price settled for selling Shipping Stop Dot Com (India) (P) Limited to Sh. I. P. Khaitan was Rs. 5.66 crore. However, as per the aforesaid minutes, this was the sale price of the company. It is correct that by selling the company, we avoided giving bank guarantee of Rs. 20 crore and also recovered Rs. 2.5 crore paid to DoT as fee. This amount of Rs. 2.5 crore was nonrefundable in case the company became nonoperational. It is correct that the decision to sell Shipping Stop Dot Com (India) (P) Limited to I. P. Khaitan was decision of the board of Karthik Financial Services Limited.
It is correct that on many occasions such dormant companies like Shipping Stop Dot Com (India) (P) Limited had been sold to relatives of Ruias. Volunteered: They sell their dormant companies to whosoever wants them including relatives and senior executives of the group.
About role of Sh. I. P. Khaitan It is correct that the decision to sell Shipping Stop Dot Com (India) (P) Limited to I. P. Khaitan was taken on 19.07.2007, but the legal formalities were finally completed later on.
I have been shown minute book of Shipping Stop Dot Com (India) (P) Limited, already Ex PW34/D, wherein my attention has been invited to CBI Vs. Ravi Kant Ruia and others Page 401 of 526 the minutes of the board meeting held on 23.07.2007, already Ex PW42/A2, which was attended by me as director.
It is correct that the resolutions mentioned at serial No.3 and 4 in these minutes were passed by the board of SSDC on the instructions of Sh. I.P. Khaitan. It is correct that these resolutions were passed as it was already decided to sell the company to I. P. Khaitan.
Ques : I put it to you that you did not receive any instructions from Vikash Saraf, Ravi Ruia or Anshuman Ruia in relation to resolutions mentioned at serial No. 3 and 4?
Ans : That is correct ."
In this deposition Sh. Girish K. Sathe deposed that Shipping Stop Dot Com (India) Private Limited was transfered to I. P. Khaitan as he wanted to apply for 21 UAS licences.
405. PW 58 Sh. Girish Sathe in his further cross examination dated 05.06.2013, pages 1 to 2, deposed about appointment of directors by I. P. Khaitan as under:
"The decision to sell Shipping Stop Dot Com (India) (P) Limited to Sh. I. P. Khaitan was taken by the board of Karthik Financial Services Limited without any outside influence. Vikash Saraf, Ravi Kant Ruia and Anshuman Ruia were not in picture in this regard.
I have been shown minutes book of Shipping Stop Dot Com (India) (P) Limited, already Ex PW 34/D, wherein my attention has been invited to the minutes of board meeting held on 16.08.2007, already Ex PW 34/D1. This meeting was attended by me as director. As per these minutes, Sh. Madan Mundra and myself resigned from the board of the company on this day. We resigned for the reason that we were employee directors of Essar group. It is correct that on the same day, Sh. S. Subramnaiam, CBI Vs. Ravi Kant Ruia and others Page 402 of 526 Sh. Ajay Madan and Ms. Sangeeta Lakhi were appointed on the board of Shipping Stop Dot Com (India) (P) Limited.
Ques : I put it to you that the aforesaid three persons were appointed on the board of Shipping Stop Dot Com (India) (P) Limited o n the instructions of Sh. I. P. Khaitan?
Ans : That is correct, as by that date it had become his company.
I do not recollect if the aforesaid three persons were directors of BPL Communications Limited. Ques : I put it to you that the three persons were appointed on the board of Shipping Stop Dot Com (India) (P) Limited as representatives of BPL Mobile Communications Limited?
Ans : They were appointed as representative of Sh. I. P. Khaitan group.
Our resignations and appointment of three directors was necessitated by the takeover of the company by Sh. I. P. Khaitan group. It is correct that Sh. Ganesan, who was an existing director, continued to be director despite the change in the management/ ownership. It is correct that he continued to be a director on the request of Sh. I. P. Khaitan. It is correct that Sh. Ganesan was already helping Sh. I. P. Khaitan in administrative work pertaining to his company. It is correct that record of Shipping Stop Dot Com (India) (P) Limited were handed over to Sh. I. P. Khaitan group on 16.08.2007......."
This witness categorically deposed that he and Sh. Madan Mundra resigned from the board as they were employees of Essar Group. He also deposed that Sh. S. Subramaniam, Sh. Ajay Madan and Ms. Sangeeta Lakhi were appointed on the board on the instructions of I. P. Khaitan.
This witness was reexamined by the prosecution, CBI Vs. Ravi Kant Ruia and others Page 403 of 526 but only question put in reexamination was that there is no record that directors were appointed on the instruction of Sh. I. P. Khaitan. This witness was a director in Karthik Financial Limited, holding company of Shipping Stop Dot Com (India) (P) Limited. Strangely prosecution did not even put a single question to him in his examinationinchief about transfer of Shipping Stop Dot Com (India) (P) Limited. Prosecution was happy just with getting documents exhibited from him by way of identification of signatures. No question on facts was put to him. This shows cautious and guarded attitude, bordering on timidity, of the prosecution and it ultimately hits at the credibility of the prosecution case. Sh. Girish K. Sathe was the best person to tell as to whom Shipping Stop Dot Com (India) (P) Limited was transferred. Mere exhibition of documents does not prove the contents of documents. In an authority reported as State Bank of India Vs. National Housing Bank, AIR 2013 SC 3478, some of the parties had merely tendered documents and led no oral evidence, which was relied upon by the trial Court. Dealing with such documentary evidence, Hon'ble Supreme Court observed in paragraph 47 as under:
"Scandalous things about the litigation is that plaintiff led no evidence. They merely tendered certain documents but did not bother to prove them in spite of a caution by the special Court........"
In paragraph 50, it was further observed as under:
"We regret to say that course adopted by the learned Judge of the special Court of looking into correspondence between the parties which even CBI Vs. Ravi Kant Ruia and others Page 404 of 526 according to learned Judge had not been proved is not permissible in law......."
Thus, documents which have been merely exhibited cannot be used for proof of the case, as the witness has not spoken about their contents, consequently there could not be any crossexamination by the defence. Similarly, in an authority reported as H. Siddiqui (Dead) by LRs. Vs. A. Ramalingam, (2011) 4 SCC 240, dealing with the proof of documents and contents thereof, Hon'ble Supreme Court observed in paragraphs 14 and 15 as under:
"14. In our humble opinion, the trial court could not proceed in such an unwarranted manner for the reason that the respondent had merely admitted his signature on the photocopy of the power of attorney and did not admit the contents thereof. More so, the court should have borne in mind that admissibility of a document or contents thereof may not necessarily lead to drawing any inference unless the contents thereof have some probative value.
15. In State of Bihar v. Radha Krishna Singh this Court considered the issue in respect of admissibility of documents or contents thereof and held as under:
(SCC p. 138, para 40) "40. ......Admissibility of a document is one thing and its probative value quite another - these two aspects cannot be combined. A document may be admissible and yet may not carry any conviction and weight or its probative value may be nil."
In an another authority reported as Buddhu Pal and Another Vs. State of M. P., 2013 CriLJ 1693, it was held by Hon'ble MP High Court that if a document was not exhibited, it CBI Vs. Ravi Kant Ruia and others Page 405 of 526 cannot be used against the accused, however, if any portion of the document is favourable to the accused, it should be read because it is a prosecution document on which it relies.
406. Similarly, DW 4 Sh. B. Sivakumar deposed about the transfer of STPL and Shipping Stop Dot Com (India) (P) Limited to Sh. I. P. Khaitan and his role as a director. His deposition dated 22.08.2014, pages 4 to 6, reads as under:
About STPL "............I was also on the board of STPL in 2004. At that time this company was known as Atul Bhagwat Trading Pvt. Limited and was owned by Mr. Saket Aggarwal and Mr. Rishi Aggarwal. Mr. Saket Aggarwal and Mr. Rishi Aggarwal transferred this company to Ms. Kiran Khaitan, who is their aunt (mausi), wife of Mr. I.P. Khaitan. Mr. I.P. Khaitan informed me that he was intending to buy this company and that he had some secretarial matters to be sorted out in this company and requested Mr. Shankarnarayanan and myself to help him out by joining the board of the company. I remained on the board of this company for about an year. A meeting of board of STPL took place on 02.06.2005, wherein I was also present as a director and the minutes of which are already Ex PW 21/C1 (D21). These minutes are correct. In this meeting, Mr. Shankarnarayanan and myself resigned from the board of the company as by that time whatever secretarial work was given to us by Mr. I.P. Khaitan was completed by us. While we were on the board of this company, we were receiving instructions only from Mr. I.P. Khaitan. The board used to take decision as per the instructions of Mr. I.P. Khaitan.
Resolutions mentioned at item no. 4 to 7 in minutes Ex PW 21/C1 were passed as per the instructions of Mr. I.P. Khaitan, which resolutions pertain to acquisition of shares in BPL Communications Limited, Share Purchase Agreements, authority to CBI Vs. Ravi Kant Ruia and others Page 406 of 526 represent the company and issue of nonconvertible optionally redeemable unsecured debentures. While on the board of this company, I never interacted with Ms. Kiran Khaitan. She was sleeping owner. All instructions used to be taken by Mr. I.P. Khaitan.
About Shipping Stop Dot Com (India) (P) Limited I am aware of a company by the name of Karthik Financial Services Limited (KFSL) as I was on the board of this company for some time. I have been shown minute book of this company, wherein minutes of the board meeting of the company held on 19.07.2007, already Ex PW 49/DA (D23) have also been shown to me. I was present in this meeting as a director. The minutes have been signed by Mr. Girish Sathe at point A and have been correctly recorded. In these minutes, it is recorded that Shipping Stop Dot Com (India) (P) Limited was 100% owned by KFSL, a company of Essar group, and it was resolved to be sold to BPL Mobile Communication Limited, owned by Mr. I.P. Khaitan. KFSL decided to sell Shipping Stop Dot Com (India) (P) Limited as this company had applied for a national long distance licence to DoT, which was allotted and the company had paid Rs.2.50 Crore to DoT as licence fee. Later on, DoT had also demanded a performance guarantee from the company but the company had no intention to use the licence and considered the deposit as waste of resources, so the decision to sell the company as it was in its interest. Mr. I.P. Khaitan had requested the board of KFSL to sell this company to him and the board acceded to his request without seeking any instructions from anyone. The company was sold for Rs.5.65 Crore.........."
In the crossexamination of this witness by prosecution there is nothing of any significance which could discredit evidentiary value of his testimony.
CBI Vs. Ravi Kant Ruia and others Page 407 of 526Thus, all the three witnesses deposed that Shipping Stop Dot Com (India) (P) Limited, a company of Essar group, was transferred to Sh. I. P. Khaitan. From their deposition it is clear that on transfer Shipping Stop Dot Com (India) (P) Limited became a company of Sh. I. P. Khaitan. It may be noted that defence witnesses are also entitled to equal weight. In an authority reported as Dudhnath Pandey Vs. State of U.P., 1981 CrLJ 618, it was held by the Hon'ble Supreme Court that:
"Defence witnesses are entitled to equal treatment with those of the prosecution. And courts ought to overcome their traditional, instinctive disbelief in defence witnesses. Quite often they tell lies, but so do the prosecution witnesses."
Decision to File Applications for 21 UAS Licences
407. It is the case of the prosecution that Essar group was having 33% shares in Hutchison Essar Limited, later on Vodafone Essar Limited, and Essar group had planned to exit from Vodafone Essar Limited. It is the case of the prosecution that on exit from Vodafone Essar Limited, Essar group desired to remain in telecom business. It is the case of the prosecution that to provide for this eventuality, they used the device of Loop Telecom Limited for filing applications for 21 UAS licences. It is the case of the prosecution that all accused, that is, Sh. Ravi Kant Ruia, Sh. Anshuman Ruia, Sh. I. P. Khaitan, Ms. Kiran Khaitan and Sh. Vikash Saraf, in conspiracy with each other, decided to file applications for 21 UAS licences.
On the other hand the case of the defence is that there is absolutely no evidence to show that any of the accused, CBI Vs. Ravi Kant Ruia and others Page 408 of 526 except Sh. I. P. Khaitan, was involved in filing applications for 21 UAS licences. It is the case of the defence that since Loop Telecom Limited belonged to Sh. I. P. Khaitan, it was he who decided to file the applications for 21 UAS licences and only his decisions were carried out.
Both parties have invited my attention to the evidence led on record in great detail.
408. Let me take note of evidence on record.
It may be noted that as per resolution dated 01.09.2007, Ex PW 46/D1 (D16), PW 61 Sh. S. Subramaniam proposed acquisition of Shipping Stop Dot Com (India) Private Limited to apply for UAS licences. In his examinationinchief dated 30.07.2013, pages 2 to 9, he deposed about decision to file applications for 21 UAS licences and signing of minutes of Loop Telecom Limited by him as under:
".......On 01.08.2006, I was appointed as CEO of BPL Mobile Communication Limited. I was informed about my appointment in this capacity by Sh. Vikash Saraf. While informing me about my appointment, he also told me that the merger of this company was not happening as of then, with Hutchison Essar. In this capacity, I was reporting to Sh. Vikash Saraf. Vikash Saraf was an employee of Essar. I was seeking strategic directions from him. By that time, I had not met Sh. I. P. Khaitan. I met him only in 2010 at Delhi, when he wanted to understand the legal implication of this case, which had led to some raids by the CBI. I never sought any directions from Sh. I. P. Khaitan.
Filing of applications and funds I am aware about applications for 21 UAS Licences applied by Shipping Stop Dot Com (India) CBI Vs. Ravi Kant Ruia and others Page 409 of 526 (P) Limited. This company already had NLD licences from DoT. Sh. Vikash Saraf informed me about making of these applications. He told me that we would apply for 21 UAS licences through Shipping Stop Dot Com (India) (P) Limited and later on, these applications were, in fact, submitted to DoT. I did not play any role in the submission of these 21 applications. However, I am aware that lot of documents were required to be submitted with these applications. I did not play any role in preparation/ vetting of the documents, to be attached with those applications. Sh. V. G. Raghavan, CFO of Essar group, arranged the funds for submission of these applications. For arranging the funds, Sh. V. G. Raghavan was in discussions with the State Bank of India, from where he got the financial facility of about Rs. 700 crore and bank guarantee to be given to the DoT. Some money had come from BPL Communications Limited and some money was contributed by the promoters of this company. I assume some money had come from Sh. I. P. Khaitan also, who was promoter of BPL Communications Limited. Two companies of Essar group had given guarantee for the aforesaid facility from the SBI.
Who owned BPL Communications Limited?
Shipping Stop Dot Com (India) (P) Limited was initially owned by Essar group and later became subsidiary of BPL Mobile Communication Limited. When the applications for 21 UAS Licenes were made, Shipping Stop Dot Com (India) (P) Limited was subsidiary of BPL Mobile Communication Limited and it was subsidiary of BPL Communications Limited. I do not know as to who owned BPL Communications Limited when the applications were made. However, when the applications were made, I was reporting to Sh. Vikash Saraf. I do not know as to who was the owners of BPL Communications Limited at that time, despite being CEO, as this information was not CBI Vs. Ravi Kant Ruia and others Page 410 of 526 shared with me. Later on in 2007 the name of Shipping Stop Dot Com (India) (P) Limited was changed to Loop Telecom (P) Limited. The applications were submitted on 03.09.2007 in the name of Shipping Stop Dot Com (India) (P) Limited. I was made a director in Shipping Stop Dot Com (India) (P) Limited in July 2007. I was not performing any functions in the capacity of director in this company. I was director in name only. However, I was holding some nominee shares in this company, which were transferred back when I left this company. I did not pay any price for these shares when they were transferred in my name nor I received any money when they were transferred from my name on my leaving the company. I had no beneficial interest in these shares. Perhaps these were some 130 shares and later on bonus shares were also added in my name. I have no idea who was controlling BPL Mobile Communication Limited. Again said, this company was a subsidiary of BPL Communications Limited, but I do not know who was controlling this holding company.
Loop Telecom (P) Limited became the subsidiary of BPL Mobile Communication Limited. Ques: Which group was controlling BPL Communications Limited?
Ans: I do not know.
I was authorized signatory for some bank accounts of Loop Telecom (P) Limited and BPL Mobile Communication Limited. The other authorized signatories were some people from BPL Mobile Communication Limited and some employees of Essar. The other employees of Essar who were authorized signatories for the bank accounts of the aforesaid two companies were Sh. Vikash Saraf and Sh. Amit Gupta, though I do not remember the names of others.
Compliance to Clause 8 I was aware that Essar was having 33% stake CBI Vs. Ravi Kant Ruia and others Page 411 of 526 in Hutchison Essar, which was holding licences for all 22 service areas across the country. I am aware of clause 8 of UASL Guidelines. I was given to understand by Sh. Vikash Saraf that Essar was compliant with this clause. I was also given to understand by him that Shipping Stop Dot Com (India) (P) Limited, later on Loop Telecom (P) Limited, was also compliant with clause 8 of UASL Guidelines.
Minutes I have been shown minutes book of Shipping Stop Dot Com (India) (P) Limited (D5), already Ex PW 34/D, wherein my attention has been drawn to the minutes of board meeting held on 16.08.2007, already Ex PW 34/D1. I did not attend this meeting physically, though I have been shown present in the meeting. However, my signature appears at point A and initials at point B on these minutes. I was told about these minutes later on and these minutes were also shown to me, though I do not recollect by whom. However, these minutes are correct, as these minutes were discussed with the people present in the meeting, but not with me.
Ques: How do you know that these minutes have been correctly recorded when you yourself say that you were not physically present in the meeting? Ans: There was no formal meeting which took place of the board of the company about the matters recorded in the minutes. The matter was discussed only on telephone but not with me. The matter was discussed in an informal meeting also sitting across the table, but I was not part of that informal meeting also.
Court Ques: The question still remains unanswered as you were neither part of any formal meeting nor informal meeting, then how can you say that these minutes are correct in the sense that they give a correct picture to what transpired in those meetings, formal or informal?
CBI Vs. Ravi Kant Ruia and others Page 412 of 526Ans: I was given to understand that the minutes were correct by the company secretary perhaps Sh. Durgesh.
The address given in these minutes is the address of BPL Mobile Communication Limited. Sh. Girish Sathe, whose name finds mention in these minutes, was an employee of Essar.
I have also been shown minutes of board meeting of Shipping Stop Dot Com (India) (P) Limited shown to be held on 24.08.2007, already Ex PW 34/D2. I did not attend this meeting also. However, my signature appears at point A and initials at point B on these minutes.
All the minutes contained in this minutes book were initially signed by Sh. Ganesan as Chairman, who was also a director in the company. In September 2008, he sent me a letter through company secretary, wherein request was made to me to sign all the minutes contained in this minutes book and I accordingly signed the minutes. Accordingly, I signed all these minutes later on. I was shown an identical set of minutes, which bore the signature of Sh. Ganesan and on seeing those minutes, I signed all the minutes contained in this minutes book. Sh. Ganesan requested me to sign these minutes as he was junior to me and I was also CEO of BPL Mobile Communication Limited, which was the holding company of Shipping Stop Dot Com (India) (P) Limited. Instead of signing on the identical set of minutes, already signed by Sh. Ganesan and sent to me, I signed on minuted contained in this minutes book as the request was made to me to sign these minutes. I understand that these minutes were correct and this is what happened. However, in the identical set of minutes, it was recorded that Sh. Ganesan was voted to chair, but in these minutes it was changed to the effect that Sh. Subramaniam, that is, myself, voted to chair, and this was the only change which was carried out in these minutes. I did not, in fact, attend any meeting CBI Vs. Ravi Kant Ruia and others Page 413 of 526 of the board of this company and, as such, there is no question of my chairing any meeting. I became a director in this company at the instance of Sh. Vikash Saraf.
The minutes of the board meeting shown to have been held on 31.08.2007, already Ex PW 34/D3, 01.09.2007, already Ex PW 34/D4, 07.09.2007, already Ex PW 34/D5, 21.09.2007, already Ex PW 34/D6, 22.09.2007, already Ex PW 34/D7, 16.10.2007, already Ex PW 34/D8, 22.10.2007, already Ex PW 34/D9, 12.11.2007, already Ex PW 34/D10, 11.12.2007, already Ex PW 34/D11, 04.01.2008, already Ex PW 34/D12, 06.03.2008, already Ex PW 34/D13, 08.04.2008, already Ex PW 42/A3, and 30.04.2008, already Ex PW 42/A4, have also been signed and initialed by me in the aforesaid manner at a single event/ time.
About certificates I have been shown certificates already Ex PW 53/C26, 53/C28 and 53/C30, available in D165, pages 276, 307 and 330 respectively, and I am not aware about these certificates, that is, I have not seen them. I was not consulted about these certificates. I have also been shown productioncum seizure memo dated 25.07.2011 (D325). It bears my signature at point A on each page. The same is now Ex PW 61/A. I had over to the IO the documents mentioned therein........"
Bare perusal of testimony of Sh. Subramaniam reveals that he gave up prosecution case in its entirety. He did not know who owned BPL Communications Limited. He did not play any role in filing applications. He denied having attended board minutes, but signed the same. He did not know anything about the certificates. His testimony is that Sh. Vikash Saraf told him that Shipping Stop Dot Com (India) (P) Limited would CBI Vs. Ravi Kant Ruia and others Page 414 of 526 apply for 21 UAS licences and it was compliant to Clause 8. He also assumed that some money had come from Khaitans. However, he deposed that when applications for 21 UAS licences were filed, Shipping Stop Dot Com (India) (P) Limited was a subsidiary of BPL Communications Limited.
409. PW 61 S. Subramaniam in his further examination inchief, page 12, deposed as under:
"......I do not remember if I had asked Sh. Priyadarshi Sidharath, company secretary, to sign documents and certificates pertaining to the filing of 21 UAS licences by Shipping Stop Dot Com (India) (P) Limited......"
PW 61 Sh. S. Subramaniam was crossexamined by the prosecution. In his crossexamination dated 02.08.2013, page 4, he deposed about funding of STPL as under:
"......It is correct that BPL Communications Limited was promoted by Sh. Rajiv Chandrasekhar and Sh. T. P. G. Nambiar and not by Sh. I. P. Khaitan. BPL Communications Limited was already transferred by Sh. Rajiv Chandrasekhar when the applications were made by Shipping Stop Dot Com (India) (P) Limited. I do not know if Sh. I. P. Khaitan contributed any fund for making these applications or not. The promoters of BPL Communications Limited might have funded these 21 applications partly, but I cannot say if it was Sh. I. P. Khaitan or others. Ques: I put it to you that Sh. I. P. Khaitan never gave any money for these 21 UAS licences?
Ans: I am not sure of that."
Here, Sh. S. Subramaniam vacillated about the funding by Sh. I. P. Khaitan. His testimony does not deserve to be relied upon.
CBI Vs. Ravi Kant Ruia and others Page 415 of 526PW 61 Sh. S. Subramaniam in his further cross examination by the prosecution, page 5, denied that Essar Group was not compliant to Clause 8 and deposed as under:
"......It is correct that I was on the board of Shipping Stop Dot Com (India) (P) Limited. I was appointed on the board of this company by Sh. Vikash Saraf. I had no understanding of my own as to whether Essar group was compliant with clause 8 of UASL Guidelines or not. However, I was given to understand this way by Sh. Vikash Saraf. It is wrong to suggest that my understanding was that Essar group was not compliant with clause 8 of UASL Guidelines and I am deliberately withholding this fact from the Court. It is wrong to suggest that I am deliberately withholding facts from this Court in order to save the accused persons from legal punishment."
Here he denied the suggestion by prosecution that Essar group was not compliant to clause 8. In the cross examination by the prosecution, the case was not put to the witness effectively. In a recent authority reported as Muddasani Venkata Narsaiah (D) Th. Lrs. Vs. Muddasani Sarojana, AIR 2016 SC 2250, Hon'ble Supreme Court emphasized the importance of crossexamination and observed in paragraph 16 as under:
"Moreover, there was no effective crossexamination made on the plaintiff's witnesses with respect to factum of execution of sale deed, PW.1 and PW.2 have not been crossexamined as to factum of execution of sale deed. The crossexamination is a matter of substance not of procedure one is required to put one's own version in crossexamination of opponent. The effect of non crossexamination is CBI Vs. Ravi Kant Ruia and others Page 416 of 526 that the statement of witness has not been disputed. The effect of not crossexamining the witnesses has been considered by this Court in Bhoju Mandal & Ors. v. Debnath Bhagat & Ors. AIR 1963 SC 1906. This Court repelled a submission on the ground that same was not put either to the witnesses or suggested before the courts below. Party is required to put his version to the witness. If no such questions are put the Court would presume that the witness account has been accepted as held in M/s. Chuni Lal Dwarka Nath v. Hartford Fire Insurance Co. Ltd. & Anr. AIR 1958 Punjab 440. In Maroti Bansi Teli v. Radhabai w/o Tukaram Kunbi & Ors. AIR 1945 Nagpur 60, it has been laid down that the matters sworn to by one party in the pleadings not challenged either in pleadings or crossexamination by other party must be accepted as fully established. The High Court of Calcutta in A.E.G. Carapiet v. A. Y. Derderian AIR 1961 Cal. 359 has laid down that the party is obliged to put his case in crossexamination of witnesses of opposite party. The rule of putting one's version in crossexamination is one of essential justice and not merely technical one. A Division Bench of Nagpur High Court in Kuwarlal Amritlal v. Rekhlal Koduram & Ors. AIR 1950 Nagpur 83, has laid down that when attestation is not specifically challenged and witness is not crossexamined regarding details of attestation, it is sufficient for him to say that the document was attested. If the other side wants to challenge that statement, it is their duty, quite apart from raising it in the pleadings, to crossexamine the witness along those lines. A Division Bench of Patna High Court in Karnidan Sarda & Anr. v. Sailaja Kanta Mitra AIR 1940 Patna 683, has laid down that the system of administration of justice allows of crossexamination of opposite party's witnesses for the purpose of testing their evidence, and it must be assumed that when the witnesses were not tested in that way, their evidence is to be ordinarily accepted. In the CBI Vs. Ravi Kant Ruia and others Page 417 of 526 aforesaid circumstances, the High Court has gravely erred in law in reversing the findings of the first Appellate Court as to the factum of execution of the sale deed in favour of plaintiff."
Though the authority deals with crossexamination by opposite party, spirit of the authority applies equally to the crossexamination of his own witness by a party.
410. PW 61 Sh. S. Subramaniam in his crossexamination by defence, dated 05.08.2013, pages 7 and 8, deposed that he did not know as to who appointed him on the board of Shipping Stop Dot Com (India) Private Limited but the decision was conveyed to him by Vikash Saraf. His deposition reads as under:
"......It is correct that for the purpose of applying for 21 UAS Licences, BPL Mobile Communication Limited acquired Shipping Stop Dot Com (India) (P) Limited and it became its subsidiary. It is correct that at that time Sh. Ajay Madan and Ms. Sangeeta Lakhi were directors in BPL Mobile Communication Limited. Since Shipping Stop Dot Com (India) (P) Limited became subsidiary of BPL Mobile Communication Limited, both of them also became director of Shipping Stop Dot Com (India) (P) Limited. I also became a director in this company for the same reason. I am not sure if Madan Mundra, Girish Sathe and V. Ganesan decided to make me a director on the board of Shipping Stop Dot Com (India) (P) Limited. However, these were the people on board of Shipping Stop Dot Com (India) (P) Limited, when I became a director in the company. I am not sure if the decision to appoint me on the board was of Sh. I. P. Khaitan.
Ques: I put it to you that you were not appointed on the board of Shipping Stop Dot Com (India) (P) Limited at the instance of Vikash Saraf ?
CBI Vs. Ravi Kant Ruia and others Page 418 of 526Ans: I was informed by him about my appointment on the board."
Here, Sh. S. Subramaniam is not sure as to who appointed him on board of Shipping Stop Dot Com (India) (P) Limited.
PW 61 Sh. S. Subramaniam in his further cross examination dated 06.08.2013, pages 5 and 6, disowned any responsibility regarding signing of Clause 8 Certificate and deposed as under:
".......I have been shown copy of memorandum and articles of association of Shipping Stop Dot Com (India) (P) Limited in file D165, which is file for UASL applications by Shipping Stop Dot Com (India) (P) Limited for Uttar Pradesh (West), at page 21 and the same bears my signature at point A and is now Ex PW 61/DJ. I have also been shown certified copy of board resolution at page 75 and the same has been certified by me and is now Ex PW 61/DJ1.
The power of attorney at page 77 also bears my signature at point A and is now Ex PW 61/DJ2. I have been shown memorandum and articles of association of Loop Telecom (P) Limited, available at page 80 and this also bears my signature at point A on each page and is now Ex PW 61/DJ3. I have also been shown letter dated 03.12.2007, already Ex PW 46/DA, available at page 110. It also bears my signature at point A. A spare copy of memorandum and articles of association of LTPL is also available at pages 130 to 159 and has also been certified by me at point B and is now Ex PW 61/DJ4. Similarly, I had signed the documents in this manner attached with the remaining 20 applications also.
I know Sh. Priyadarshi Sidharath who was working as company secretary in BPL Mobile, but I do not know his tenure in this capacity. It is correct CBI Vs. Ravi Kant Ruia and others Page 419 of 526 that he was reporting to me. It is wrong to suggest that the three certificates, Ex PW 53/C26, C28, C30 and Ex PW 53/E23, were signed by Sh.
Priyadarshi Sidharath at my instance. It is wrong to suggest that by saying so I want to absolve myself from my responsibility regarding these certificates. It is wrong to suggest that all these certificates were given by me to Priyadarshi Sidharth asking him to sign the same......."
Thus, Sh. S. Subramaniam disowned any role in signing the certificates for compliance to Clause 8.
In his deposition, both in examinationinchief and crossexamination, he deposed that Vikash Saraf informed him that they would be applying for 21 UAS licences, but he did not say anywhere that the resolution dated 01.09.2007 was passed at the instance of Vikash Saraf. Rather, he denied any role of his own in the filing of the applications for UAS licences in 21 service areas. This is contrary to record, as the resolution dated 01.09.2007, already quoted above, is shown to have been passed at his instance. He was not questioned by the prosecution at all about the resolution dated 01.09.2007, Ex PW 46/D1, regarding acquisition of Shipping Stop Dot Com (India) Private Limited and applying for UAS licences. His entire deposition is ambivalent, full of contradictions and inconsistencies. No reliance at all can be placed on it. His deposition is of no avail to the prosecution and deserves to be discarded in its entirety, as he has not displayed any quality of a reliable witness, what to talk of a sterling witness. In this regard, it is instructive to quote an authority reported as Rai CBI Vs. Ravi Kant Ruia and others Page 420 of 526 Sandeep alias Deepu Vs. State of NCT of Delhi, AIR 2012 SC 3157, wherein dealing with quality of a good witness, Hon'ble Supreme Court observed in paragraph 15 as under:
"In our considered opinion, the 'sterling witness' should be of a very high quality and caliber whose version should, therefore, be unassailable. The Court considering the version of such witness should be in a position to accept it for its face value without any hesitation. To test the quality of such a witness, the status of the witness would be immaterial and what would be relevant is the truthfulness of the statement made by such a witness. What would be more relevant would be the consistency of the statement right from the starting point till the end, namely, at the time when the witness makes the initial statement and ultimately before the Court. It should be natural and consistent with the case of the prosecution qua the accused. There should not be any prevarication in the version of such a witness. The witness should be in a position to withstand the crossexamination of any length and strenuous it may be and under no circumstance should give room for any doubt as to the factum of the occurrence, the persons involved, as well as, the sequence of it. Such a version should have corelation with each and everyone of other supporting material such as the recoveries made, the weapons used, the manner of offence committed, the scientific evidence and the expert opinion. The said version should consistently match with the version of every other witness. It can even be stated that it should be akin to the test applied in the case of circumstantial evidence where there should not be any missing link in the chain of circumstances to hold the accused guilty of the offence alleged against him. Only if the version of such a witness qualifies the above test as well as all other similar such tests to be applied, it can be held that such a witness can be called as a 'sterling witness' whose version can be accepted by the Court CBI Vs. Ravi Kant Ruia and others Page 421 of 526 without any corroboration and based on which the guilty can be punished. To be more precise, the version of the said witness on the core spectrum of the crime should remain intact while all other attendant materials, namely, oral, documentary and material objects should match the said version in material particulars in order to enable the Court trying the offence to rely on the core version to sieve the other supporting materials for holding the offender guilty of the charge alleged."
411. PW 56 Sh. Ajay Madan, who was Director in BPL Mobile Communications Limited, in his examinationinchief dated 22.04.2013, pages 3 and 4, deposed about applying for UAS licences in 21 service areas through Shipping Stop Dot Com (India) Private Limited. His deposition reads as under:
".......I have been shown minutes of the board meeting held on 28.03.2007, wherein I have been shown present as director. On going through the minutes, I do recall the meeting and the resolutions passed therein. These minutes have been signed by Sh. Vikash Saraf at point A as Chairman, which I recognize. These minutes are already Ex PW34/B2.
I have been shown minutes of the board meeting held on 01.09.2007, wherein I have been shown present as director and as Chairman having chaired the meeting. On going through these minutes, I do not recall, if I attended this meeting. These minutes have been signed by Sh. Vikash Saraf at point A, which I identify. If I had chaired the meeting, I must have signed these minutes. These minutes are already Ex PW 46/D1 (D16). However, I had seen these minutes in the next board meeting, so I have knowledge of the resolutions recorded therein.
Question: Did you object as to why your presence was shown in the meeting and in the minutes you being shown as having chaired the meeting?CBI Vs. Ravi Kant Ruia and others Page 422 of 526
Answer: I probably did not do it. Again said, I did not notice it.
I cannot say as to why Sh. Vikash Saraf recorded my presence and signed the minutes as Chairman......."
This witness has ambivalent attitude about the resolution passed on 01.09.2007 for applying to DoT for 21 UAS licences. First he could not recall if he had attended this meeting and thereafter he deposed that he had seen the minutes only in the next board meeting and signed the same without any objection. The record shows that he chaired the meeting. Thus, he deposed contrary to record.
PW 56 Sh. Ajay Madan in his further examination inchief, page 7, deposed about resolution dated 01.09.2007, Ex PW 34/D4 (D5), pertaining to transfer of shares of Shipping Stop Dot Com (India) Private Limited held by Karthik Financial Services Limited to BPL Mobile Communication Limited as under:
".......I have also been shown minutes of the board meeting held on 01.09.2007, wherein I have been shown present as director. These minutes have also been signed by Sh. S. Subramaniam at point A, which I identify. These minutes are already Ex PW 34/D4. However, I do not recall, if I was present in this meeting or not. On going through the minutes, I do not recall, if the business recorded in these minutes was actually transacted or not in that meeting. I was normally concerned with technology and whenever, any financial transaction was transacted I was not involved. I was neither consulted nor would concentrate on financial transactions......."CBI Vs. Ravi Kant Ruia and others Page 423 of 526
In this deposition also, PW 56 failed to recall any such resolution by which Shipping Stop Dot Com (India) Private Limited was transferred from Essar Group to BPL Group. He did so on the pretext that he was concerned with technology and not with financial transactions.
PW 56 Sh. Ajay Madan in his further examination inchief, pages 13 to 15, deposed about filing of applications for 21 UAS licences as under:
"Question: Please tell this Court as to who took the decision for applying for 21 UAS licences on behalf of Shipping Stop Dot Com (India) (P) Limited. What was your role therein?
Answer: We were conveyed the decision by Sh. Vikash Saraf. My role in this was to depute one person to help out in filling up the licence applications. I asked Sh. Sanjeev Chanchodia, Chief Operating Officer of ETIPL, to depute a person and he deputed Sh. Prasad Karnik for the aforesaid work and asked him to report to Sh. Vikash Saraf. Sh. Karnik did accordingly.
Question: When you were on the board of two Loop companies, the board minutes of which have been shown to you, with which company you were employed?
Answer: ETIPL.
Question: When you were employed with ETIPL, what made you to come on the board of two Loop companies?
Answer: I was on the board of these two Loop companies for providing my technical expertise in network and other operational matters because of my past experience. I was appointed on the board of these two companies on the directions of Sh. Vikash CBI Vs. Ravi Kant Ruia and others Page 424 of 526 Saraf.
Question: The decisions which were conveyed to you and the board of two Loop companies by Sh. Vikash Saraf, were taken by him individually or at the instance of someone else including promoters of these two Loop companies or ETIPL?
Answer: I cannot say anything in this regard except that these decisions were conveyed to me by Sh. Vikash Saraf.
Question: Would you please tell this Court as to who are the promoters of these two Loop companies?
Answer: I did not know the details......."
In this deposition also, he is ambivalent. He could not tell as to whose decision was it to apply for 21 UAS licences despite being on the board of the company. He deposed that his only role was to depute one person for helping in filing of applications and he asked Sh. Sanjeev Chanchodia to do it and he accordingly deputed Sh. Prasad Karnik.
412. PW 56 Sh. Ajay Madan in his crossexamination dated 23.04.2013, page 9, deposed as under:
"LTL was part owned by Essar group, as per my understanding with an equity of less than 10%......"
Thus, the witness deposed that Essar Group was holding equity less than 10% in Loop Telecom Limited. This is as per the Guidelines.
PW 56 Sh. Ajay Madan in his further cross examination dated 23.04.2013, page 10, deposed that he did not know as to whose decision was it to file applications for UAS licences. His deposition reads as under:
"I cannot say, if the decision of LTL to apply for CBI Vs. Ravi Kant Ruia and others Page 425 of 526 twenty one UAS licences, was in line with its holding company. I do not know who took the decision to apply for twenty one UAS licences, but it was conveyed to us that the company was applying for these licences. I do not know, if Ms. Sangeeta Lakhi was on the board of Loop Mobile Holding (India) Limited. I have no idea, if she was communicating the decision of the holding company. It is wrong to suggest that Sh. Vikash Saraf was not conveying the decisions......."
PW 56 Sh. Ajay Madan in his further cross examination dated 23.04.2013, page 11, disowned his role in preparation and filing of applications as under:
".......It is wrong to suggest that Sh. Prasad Karnik was reporting to me directly. Volunteered: He used to report to Sh. Sanjiv Chanchodia and Sh. Sanjiv Chanchodia used to report to me. It is wrong to suggest that I myself told Sh. Prasad Karnik to help Shipping Stop Dot Com (India) (P) Limited to prepare the applications for twenty one UAS licences. It is wrong to suggest that Sh. Prasad Karnik prepared the twenty one UAS licences under my guidance. It is wrong to suggest that after preparing the same, he showed these applications to me and I reviewed the same. Volunteered: The applications were prepared in Essar House and Delhi under the guidance of BPL Mobile Consultant Sh. Sehgal and the team at Essar House, Mumbai.
It is wrong to suggest that the applications were not prepared at Essar House. It is further wrong to suggest that Essar team did not help in the preparation of these applications. I did not tell these facts before the IO as the question did not come......."
Thus, Sh. Ajay Madan disowned his role in totality in filing the applications including signing of certificates.
CBI Vs. Ravi Kant Ruia and others Page 426 of 526PW 56 Sh. Ajay Madan was totally ambivalent in his deposition. Not only this, he also deposed contrary to the record. He disowned the resolution, Ex PW 46/D1, passed for filing the applications. Perusal of his deposition reveals that his evidence lacks assertiveness and cogency. In his entire deposition, he kept wavering and did not stick to any particular stance. Thus, no reliance can be placed on his testimony. His testimony is also of no avail to the prosecution and is discarded in toto.
413. PW 46 Sh. T. Sathisan is an independently practicing Chartered Accountant. Earlier, he worked with BPL Group since 1997 as Sr. Manager. He attended the meeting dated 01.09.2007 of board of BPL Communications Limited as invitee. In his examinationinchief dated 06.02.2013, page 2, he deposed about transfer of BPL companies to Khaitan Group as under:
".......BPL Mobile business was acquired by Khaitan group in the year 200405. I was not involved in negotiating the transfer of the group to Khaitan group. However, I was connected with due diligence work, that is, preparing and explaining various documents. I continued with the BPL Mobile Communications Limited after transfer of the business to Khaitan group. In 2010, I was Assistant Vice President (Finance). After two years of transfer, the name of BPL Mobile Communications Limited, which was providing telecom services for Mumbai service area, was changed to Loop Mobile (India) Limited. I was CFO of this company in 2010.
When competition was increasing in mobile communication field, BPL group was not able to expand its business due to financial constraint and CBI Vs. Ravi Kant Ruia and others Page 427 of 526 this was the reason for transfer of the group to Khaitan group......."
PW 46 Sh. T. Sathisan in his further examinationin chief, pages 5 and 6, deposed about the board meetings and Ms. Sangeeta Lakhi attending the meetings as a nominee of I. P. Khaitan as under:
".......I have been shown register containing minutes of board meeting of Loop Mobile (India) Limited, formerly known as BPL Mobile Communications Limited, for the period 23.02.2005 to 20.12.2007. The register is correct and is already Ex PW 34/B (D16). I have been shown minutes of board meetings held on 28.06.2007, 01.09.2007 and 20.12.2007. These meetings were attended by me as invitee. I am unable to identify as to who has signed the minutes dated 28.06.2007 and 20.12.2007. The minutes dated 20.12.2007 are already Ex PW 34/B3. Though I am unable to identify the signature of the person who has signed the board meeting dated 28.06.2007, but the contents contained therein are correct as whatever transpired in that meeting has been recorded correctly as I was present in the meeting as an invitee. These minutes are now Ex PW 46/D. However, the minutes dated 01.09.2007 have been signed by Sh. Vikash Saraf at point A, which I identify and these minutes are now Ex PW 46/D1. In the meeting held on 28.06.2007, I had tendered clarifications regarding annual accounts, annual operating plan and bank guarantee to DoT.
Sh. I. P. Khaitan usually would not attend the meeting of the boards of Loop Mobile (India) Limited and Loop Telecom Limited, but Ms. Sangeeta Lakhi would attend the board meetings as his nominee......"
He deposed that minutes book D16 of BPL CBI Vs. Ravi Kant Ruia and others Page 428 of 526 Communications Limited is correct. Thus, he reaffirmed the minutes, Ex PW 46/D1, dated 01.09.2007 (D16), in which decision was taken to apply for 21 UAS licences. He also deposed that Ms. Sangeeta Lakhi used to attend meetings of board as representative of Sh. I. P. Khaitan.
PW 46 Sh. T. Sathisan in his crossexamination, pages 7 to 11, reaffirmed the role of Khaitan Group in filing of applications. His crossexamination reads as under:
Acquisition by Khaitan and sale to HEL "When BPL group was acquired by Khaitan group in the year 2004, the senior management of BPL group was aware that acquisition has been done by the Khaitans. At that time, Sh. S. Subramaniam and Sh. Sandeep Basu were in the senior management of BPL group. At the time of transfer of BPL group, there was a communication from the CMD of this group that the transfer was taking place to the Khaitan group. We were also aware, that is, the senior management as well as myself, that these two subsidiaries of BPL Communications Limited were ultimately to be sold to Hutchison Essar Limited (HEL). This information was made available as sentiments of employees were also involved. After sometime of the acquisition of BPL group by the Khaitan group, we were asked to report to HEL informally. I was not reporting to Christopher Foll, CFO of HEL, till July 2006, but I certainly interacted with him till this period.
It is correct that I joined the board of directors of Loop Telecom (P) Limited on 03.01.2009 and resigned on 30.03.2011. During this period, some strategic decisions such as raising of equity were taken by the board of Loop Telecom (P) Limited at the asking of Sh. I. P. Khaitan. It is also correct that during this period, the operational decisions were discussed and taken by the board members CBI Vs. Ravi Kant Ruia and others Page 429 of 526 themselves. During this period Sh. Vikash Saraf was not on the board of this company. It is correct that during this period, Vikash Saraf did not give any instruction to the board or to me or to anyone else in my presence.
During my tenure between July 2005 and March 2011, I was reporting firstly to Sh. S. Subramaniam, thereafter to Sh. Sanjeev Chachondia and lastly to Sh. Sandeep Basu. All these three officials were full time employees of Loop group. Their salary was also being paid by the Loop group. Court Ques: During which period did you report to Sh. S. Subramaniam?
Ans: I reported to him during the period 2004 to 2007.
Court Ques: Was he an employee of Loop group during this period also?
Ans: That is correct.
Court Ques: How do you know it?
Ans: I was handling finance of Loop Mobile (India) Limited, so I know it.
There were occasions when I. P. Khaitan visited Mahim office of Loop Telecom (P) Limited and he held review meetings with senior members of Loop Telecom (P) limited. I was also present in some of these review meetings. During my tenure with Loop Telecom (P) Limited, I knew that I. P. Khaitan and Kiran Khaitan were ultimate promoters and owners of this company. This was the impression that Khaitans were related to Ruias and many Essar employees were helping them, because of this relation. I received my salary only from Loop group companies, after their acquisition by Khaitans. During the period I was with the Loop group, I did not do any work for Essar group.
About filing of applications I have been shown register of board minutes of Loop Mobile (India) Limited, already Ex PW 34/C, wherein there are minutes of board meeting held on CBI Vs. Ravi Kant Ruia and others Page 430 of 526 07.02.2008, already Ex PW 34/C1, and in this meeting I was present as an invitee. In this meeting it was resolved that 65,51,718 compulsorily convertible preference shares of Rs. 10 each at a premium of Rs. 135 per share were to be allotted to M/s Gypsy Rover of Mauritius. In the meeting it was also discussed that these preference shares were being allotted to M/s Gypsy Rover as it belongs to Khaitans, promoter of Loop group.
I have been shown register of minutes of board meetings of BPL Mobile Communications Limited, now Loop Mobile (India) Limited, already Ex PW 34/B, wherein are the minutes of the board meeting held on 01.09.2007, already Ex PW 46/D1. I was present in this meeting as an invitee. In this meeting it was discussed and resolved that this company would acquire Shipping Stop Dot Com (India) (P) Limited. However, I do not remember if a resolution passed by the holding company BPL Communications Limited was shown at the board or not, but the board was aware about a resolution passed by it to acquire Shipping Stop Dot Com (India) (P) Limited. This decision was taken by the board of Loop Mobile (India) Limited just to implement the decision of the holding company in this regard.
Originally, Karthik Financial Services Limited was owning Shipping Stop Dot Com (India) (P) Limited. After Shipping Stop Dot Com (India) (P) Limited was acquired by Khaitan group, two of its directors namely Sh. Girish Sathe and Sh. Madan Mundra, belonging to Karthik Financial Services Limited resigned.
At the time of acquisition of Shipping Stop Dot Com (India) (P) Limited by Khaitan group, it was having an NLD licence worth about Rs. 2.5 crore and other assets of Rs. 3.1 crore. BPL Mobile Communications Limited acquired Shipping Stop Dot Com (India) (P) Limited for the purpose of applying for UAS Licences. At that time, it was in the CBI Vs. Ravi Kant Ruia and others Page 431 of 526 public domain that telecom licences would be issued to the existing operators only. Again said, that preference would be given to them.
About shareholding I have been shown file D165, a DoT file, wherein there is a fax copy of letter dated 03.12.2007, written by Sh. S. Subramaniam to DoT. I identify his signature at point A and the letter is now Ex PW 46/DA. It was decided that 51% shares of Shipping Stop Dot Com (India) (P) Limited would be allotted to Loop Mobile (India) Limited since it was already operating a licence in Mumbai service area. Remaining 49% of the shares were allotted to BPL Communications Limited, later on Loop Mobile Holdings (India) Limited. I do not know as to what amount was paid by BPL Communications Limited for the allotment of these shares to the company as it was an additional equity issued by the company.
About arm length transaction I have been shown a certified copy of business center agreement dated 25.09.2009 entered into between Essar Information Technology Limited and Loop Telecom (P) Limited, wherein I have signed on behalf of Loop Telecom (P) limited at point A with initials at each page. The agreement is now Ex PW 46/DB. It is correct that as per this agreement Essar Information Technology Limited, an Essar company, charged monthly fee of Rs. 24,13,000/ from Loop Telecom (P) Limited for use of its premises described in the agreement. It is correct that before this agreement Loop Telecom (P) Limited used to operate from Mahim office of Loop Mobile (India) Limited."
This detailed crossexamination shows that Khaitan Group was a separate group and the applications were filed by Khaitan Group. PW 46 Sh. T. Sathisan also did not name any of CBI Vs. Ravi Kant Ruia and others Page 432 of 526 the accused except that Vikash Saraf signed the minutes of the meeting of the board dated 01.09.2007, Ex PW 46/D1. The weight of his evidence is that the BPL companies were acquired by I. P. Khaitan and applications for 21 UAS licences filed by Loop Telecom Limited were filed at the instance of I. P. Khaitan. This witness also did not support the prosecution version. He explained that majority shares in Loop Telecom Limited were held by BPL Mobile Communication Limited as it was an existing licensee in Mumbai, with better chances for getting new licences.
414. PW 57 Sh. Jayan Dsouza, DGM (Finance), Essar Group. He also attended the meeting of 01.09.2007 of the board of BPL Communications Limited. In his examinationinchief dated 03.06.2013, page 2, deposed about his role in preparation of the 21 applications for UAS licences as under:
".......I know Sh. P.R. Karnik, who was working for Essar Telecom Infrastructure Pvt. Ltd. While working in Essar Telecom Business Group, I had prepared some financial projections for applying for UAS licences and helped Sh. P.R. Karnik in applying for these licences. Some templates of these projections were already there for Essar Spacetel Ltd. on record in the Group. I used those templates, also did some market research and also took technical inputs from Loop Mobile and prepared the projections. Only Sh. Amit Gupta directed me to prepare these projections. I also know Sh. Anupam Gupta as he was working for Essar Telecom Business Group. He assisted me in preparing these projections as he was junior to me. I took 34 days in preparing these projections.
I have been shown D165 and 167 to 186, that CBI Vs. Ravi Kant Ruia and others Page 433 of 526 is, twenty one applications for UAS licences filed by Shipping Stop Dot Com (India) (P) Limited. With each application, a copy of the projection prepared by me, is attached. These projections are now Ex PW57/A1 (collectively) to A21 (collectively)......"
This witness deposed that he prepared the financial projections filed with the applications.
PW 57 Sh. Jayan D'souza was crossexamined by the prosecution in which he denied that Vikash Saraf had directed him to help Loop Mobile (India) Limited and Loop Telecom Limited.
PW 57 Sh. Jayan D'souza in his crossexamination by the defence on the same day, page 6, deposed as under:
"I have been shown minute book, D16, already Ex PW34/B of BPL Mobile Communications Ltd. Therein my attention has been invited to the minutes of board meeting held on 01.09.2007, already Ex PW46/D1, wherein I have been shown present on invitation. I have gone through the minutes and I say that I am aware of the proceedings recorded therein. That meeting was chaired by Sh. Ajay Madan. These minutes correctly record the proceedings, which took place in that meeting......"
Thus, the witness reaffirmed that the decision was taken in the board meeting held on 01.09.2007 to apply for 21 UAS licences. It may be noted that this meeting was attended by PW 61 Sh. S. Subramaniam and PW 56 Sh. Ajay Madan as directors and PW 46 Sh. T. Sathisan as invitee, whose deposition has already been noted.
CBI Vs. Ravi Kant Ruia and others Page 434 of 526PW 57 Sh. Jayan D'souza in his further cross examination, page 8, deposed about preparation of applications for 21 UAS licences as under:
".......For preparing business projections for applying for twenty one UAS licences on behalf of Shipping Stop Dot Com (India) (P) Limited, I needed technical inputs, which were provided by Loop Mobile India Ltd., through Sh. S. Subramaniam and his team. It is correct that after preparing these projections, Sh. Anupam Gupta and myself handed over the same to Sh. P.R. Karnik, who at that time was reporting to Sh. Ajay Madan. It is correct that I was informed by Sh. P.R. Karnik that he had been asked by Sh. Ajay Madan to help Shipping Stop Dot Com (India) (P) Limited for preparing twenty one UAS licence applications.
Question: I put it to you that Sh. Vikash Saraf was not involved in the preparation of financial projections for the twenty one UAS licence applications?
Answer: That is correct.
It is correct that I was involved in these twenty one applications only to the extent of preparation of financial projections. It is correct that at the time of preparing of these projections, I was aware that Shipping Stop Dot Com (India) (P) Limited was being acquired by Sh. I.P. Khaitan. It is correct that Sh. I.P. Khaitan is brotherinlaw of Sh. Ravi Ruia. It is correct that I helped in preparing financial projections only because of close relationship between Sh. I.P. Khaitan and Sh. Ravi Ruia......"
In this deposition he did not name any of the accused asking him to help in the preparation of applications. He deposed that he knew that Shipping Stop Dot Com (India) (P) Limited was owned by Sh. I. P. Khaitan.
CBI Vs. Ravi Kant Ruia and others Page 435 of 526PW 57 Sh. Jayan Dsouza in his crossexamination, page 10, deposed as to why he was assisting in documentation of Shipping Stop Dot Com (India) Private Limited as under:
"......Since ETHL was holding 9.99% equity in LMIL, I was assisting it in documentation of this loan. It is correct that main work about this loan was also done by Sh. S. Subramaniam and his Loop team......"
He deposed that he helped in preparing the financial projections as ETHL was holding 9.9% equity in BPL Mobile Communications Limited.
PW 57 Sh. Jayan D'souza in his further cross examination, page 12, denied any role of Vikash Saraf in the preparation of projection and deposed as under:
"Question: I put it to you that Sh. Vikash Saraf never directly told you to prepare financial projections?
Answer: That is correct.
It is correct that since Sh. Amit Gupta was reporting to Sh. Vikash Saraf, I inferred that Sh. Vikash Saraf must have asked Sh. Amit Gupta to get it done."
The gist of his deposition is that he helped Sh. P. R. Karnik in the preparation of business projections to be annexed to the applications for UAS licences. In his deposition he did not name any of the accused. Rather, he deposed that the meeting in which decision to apply for UAS licences was taken, was chaired by Sh. Ajay Madan and the minutes correctly captured the proceedings of the board. His evidence also is of no avail to the prosecution. Thus, all the four witnesses who CBI Vs. Ravi Kant Ruia and others Page 436 of 526 attended the meeting of 01.09.2007 of board of BPL Communications Limited did not support the prosecution version about filing of applications.
415. PW 42 Sh. V. Ganesan, who was one of the directors in Shipping Stop Dot Com Private Limited, deposed about it in his examinationinchief dated 29.01.2013, pages 2 to 4, as under:
".......I was on the board of directors of some group companies for the years 2004 onwards. One of these companies was Shipping Stop Dot Com (India) (P) Limited and some other property companies, names of which I am unable to recall.
I became director in Shipping Stop Dot Com (India) (P) Limited somewhere in September 2006.
Other directors of the company were Sh. Girish Sathe and Sh. Madan Mundra. It was not a full fledged operating company. To make the company fully operational, it applied for telecom licences for national long distance services (NLD). I do not remember if the company got the licence or not. Mr. Vikash Saraf was heading the telecom business of the group. The instructions for carrying out the business of telecom by the company used to come from Sh. I. P. Khaitan even in the year 2006. Somewhere in 2005, Sh. Vikash Saraf called me in his cabin where Sh. I. P. Khaitan was also present. There Sh. Vikash Saraf asked me to help Sh. I. P. Khaitan in the administration of BPL Communications Limited and also Santa Trading (P) Limited, BPL Communications Limited being holding company. I do not know as to whose company was BPL Communications Limited in the year 2005.
The shares of Shipping Stop Dot Com (India) (P) Limited were held by Karthik Financial Services Limited in the year 2005. I do not know who were holding the shares of Karthik Financial Services Limited in that year.
CBI Vs. Ravi Kant Ruia and others Page 437 of 526The meeting of the board of Shipping Stop Dot Com (India) (P) Limited used to be held in the office of Essar group. Since all directors were employee directors, the meeting would be held in the Essar office itself in the year 2005. At that time, there was no activity of the company. Chairman of the meeting would propose the business to be transacted in the board meeting.
I have been shown minutes of board meetings of Shipping Stop Dot Com (India) (P) Limited for the years 20072009 (D5), already Ex PW 34/D. Therein I have been shown minutes of the board meeting held on 17.05.2007, wherein I was also present and presided over the board meeting. The minutes have been signed by me at point A, which I identify. These minutes are now Ex PW 42/A. Similarly, the board meeting held on 02.07.2007 was also presided over by me and minutes thereof have also been signed by me at point A and these minutes are now Ex PW 42/A1. Similarly, the board meeting held on 23.07.2007 was also chaired by me and the minutes thereof have also been signed by me. These minutes are now Ex PW 42/A2. The decisions resolved to have been passed in this meeting had already been taken by the holding company of Shipping Stop Dot Com (India) (P) Limited and Karthik Financial Services Limited was its holding company on that day, that is, 23.07.2007. The instruction to pass the resolution that Shipping Stop Dot Com (India) (P) Limited should apply for UAS Licences came from Sh. I. P.Khaitan. The resolutions mentioned as resolution 3 (i) and (ii) were passed to meet some criteria needed for applying for UAS Licences. Resolution mentioned at 3 (iii) was passed to increase the authorized capital of the company to make it eligible for applying for the UAS licences......."
This witness deposed in his examinationinchief CBI Vs. Ravi Kant Ruia and others Page 438 of 526 itself that instructions to pass the resolution that the company should apply for 21 UAS licences were given by Sh. I. P. Khaitan.
PW 42 Sh. V. Ganesan in his further examinationin chief, page 11, deposed as under:
"......I continued to be on the board of Loop Telecom (P) Limited, earlier known as Shipping Stop Dot Com (India) (P) Limited, after 16.08.2007 on the request of Sh. I. P. Khaitan, for administrative convenience......"
This witness was crossexamined by the prosecution. Strangely the aforesaid version that the applications for UAS licences were filed on the instruction of I. P. Khaitan was not challenged. However, during crossexamination by the prosecution, page 12, he reaffirmed the role of I. P. Khaitan and volunteered out as under:
".......Volunteered: Somewhere in 2005, Sh. Vikash Saraf called me in his cabin, where Sh. I. P. Khaitan was also present and at that time, Sh. Vikash Saraf requested me to help Sh. I. P. Khaitan as initially Loop Telecom (P) Limited was an Essar group company. Subsequently this company was transferred to BPL Communications Limited. Sh. I. P. Khaitan requested me to continue on the board of Loop Telecom (P) Limited. I meant that this request had come from Sh. I. P. Khaitan......."
PW 42 Sh. V. Ganesan in his crossexamination by the defence dated 29.01.2013, page 14, deposed about the role of I. P. Khaitan as under:
".......When I was called in his cabin by Sh. Vikash Saraf somewhere in 2005, apart from telling other CBI Vs. Ravi Kant Ruia and others Page 439 of 526 things, as stated by me above, he also told me that BPL Communications Limited and Santa Trading (P) Limited belong to I. P. Khaitan. At that time, apart from Sh. I. P. Khaitan, Sh. P. Ratanraj was also present in the cabin of Sh. Vikash Saraf. I was aware at that time that I. P. Khaitan was based in Dubai. I was also aware that he had no set up in India......."
PW 42 Sh. V. Ganesan in his further cross examination dated 30.01.2013, pages 1 to 4, deposed about the role of I. P. Khaitan in the acquisition of Shipping Stop Dot Com (India) Private Limited as under:
"In the process of providing administrative support to the companies of I. P. Khaitan, I used to prepare draft minutes of board meetings of BPL Communications Limited. The instructions used to be given by I. P. Khaitan both to me and Sh. P. Ratanraj. After preparing the draft minutes, I used to hand over the same to Sh. P. Ratanraj for further followup action. This happened in the years 2005 and 2006. From 2007 onwards, I have not been preparing draft minutes of BPL Communications Limited.
After receiving instructions from Vikash Saraf in the presence of I. P. Khaitan and P. Ratanraj, as stated by me above, I used to regularly interact with Sh. I. P. Khaitan in connection with work of BPL Communications Limited and Santa Trading (P) Limited (STPL).
Shipping Stop Dot Com (India) (P) Limited was an Essar company before its acquisition by BPL Communications Limited. I was aware that BPL Communications Limited was a Khaitan group company. I became director in Shipping Stop Dot Com (India) (P) Limited only in September 2006. When I became director in this company, it was an Essar group company. I think this company did not take any major decision from September 2006 to CBI Vs. Ravi Kant Ruia and others Page 440 of 526 December 2006, the period during which I remained on the board of this company. I do not know as to what happened in this company before my joining the board in September 2006. I know that the ownership of this company changed from Essar group company to Khaitan group company somewhere in 2007. During the year 2006 when I was on the board of Shipping Stop Dot Com (India) (P) Limited, I did not receive any instruction from I. P. Khaitan regarding this company and received instruction only about BPL Communications Limited and STPL.
I was neither on the board of Karthik Financial Services Limited nor its employee at any time. I have no personal knowledge as to what happened in this company. The only decision communicated to me as having been taken by Karthik Financial Services Limited was to the effect that BPL Communications Limited had agreed to purchase entire stake in Shipping Stop Dot Com (India) (P) Limited from Karthik Financial Services Limited. The instructions for making applications for UAS Licences in 21 service areas came from I. P. Khaitan. These instructions did not come from Karthik Financial Services Limited.
I. P. Khaitan also told me that he wanted to apply for these licences as early as possible, as the licences were going to be issued on firstcome first served basis. Several formalities were required to be completed by Shipping Stop Dot Com (India) (P) Limited before applying for UAS licences and these included alteration in memorandum of association, increase in authorized capital of the company etc. It is correct that these activities were to take considerable time, since statutory procedures were required to be followed. The decision to transfer the ownership of Shipping Stop Dot Com (India) (P) Limited was taken on 23.07.2007. However, the formalities of transfer would take some time as some procedures were required to be followed including CBI Vs. Ravi Kant Ruia and others Page 441 of 526 approval by board of BPL Mobile Communications Limited. The applications for UAS licences were to be filed only after BPL Communications Limited acquire entire stake of Shipping Stop Dot Com (India) (P) Limited from Karthik Financial Services Limited.
In the board meeting of Shipping Stop Dot Com (India) (P) Limited held on 16.08.2007, the minutes of which are Ex PW 34/D1, directors, namely, Sh. Ajay Madan, Sh. S. Subramaniam and Ms. Sangeeta Lakhi were brought on the board. Sh. S. Subramaniam and Ms. Sangeeta Lakhi were representatives of I. P. Khaitan and they were brought on the board on his request.
Sh. S. Subramaniam and Sh. Ajay Madan had wide experience in telecom sector. Most of the operational decisions taken by the board of Loop Telecom Limited were taken based on the discussions between these two persons. The strategic decisions like applying for UAS licences, increase in capital etc., were taken as per the decision of I. P. Khaitan as taken in the holding companies BPL Communications Limited and STPL.
Ms. Sangeeta Lakhi was also on the board of BPL Communications Limited and STPL. She used to communicate to the board of Loop Telecom Limited, the decisions by these two holding companies. On many occasions, S. Subramaniam used to tell in the board meetings of Loop Telecom Limited that he was acting as per the instructions of Sh. I. P. Khaitan........"
In the crossexamination also, this witness affirmed that when Shipping Stop Dot Com (India) (P) Limited applied for 21 UAS licences, it was a company of Sh. I. P. Khaitan. He also deposed that Sh. S. Subramaniam, Sh. Ajay Madan and Ms. Sangeeta Lakhi were representatives of Sh. I. P. Khaitan.
CBI Vs. Ravi Kant Ruia and others Page 442 of 526This witness repeatedly deposed both in the examinationinchief as well as in crossexamination that applications for 21 UAS licences were filed on the instruction of I. P. Khaitan. However, the prosecution did not challenge this version either by reexamination or by crossexamination. Sh. V. Ganesan is categorical that applications for 21 UAS licences ere filed on the instructions of Sh. I. P. Khaitan.
The above version is also corroborated by PW 95 Sh. Ratanraj Packiarajan. It is interesting to take a look on his deposition also.
416. PW 95 Sh. Ratan Raj Packiarajan, Director in BPL Mobile Communication Limited, deposed in his examinationin chief itself that he was working as per the instructions of I. P. Khaitan. His examinationinchief dated 20.12.2013, pages 1 to 3, reads as under:
"......I know Sh. Vikash Saraf. He was CEO of ETHL. I was also on the board of Loop Mobile Holding (India) Limited (LMHIL). When I was working with ETHL, one day Sh. Vikash Saraf asked me to come to his cabin. He showed me Sh. I. P. Khaitan and said that he was the owner of BPL Communications Limited and also a relative of our promoters. Sh.
Vikash Saraf asked me to help out Sh. I. P. Khaitan by doing some administrative work. Sh. I. P. Khaitan said since he was based overseas, I may become a director on the board of BPL Mobile Communication Limited, so that the administrative work could be done at ease as my availability in the office was always there, so that documents signing or admin work could be done easily.
I had signed the minutes of board meetings of LMHIL. Whenever any decision had to be taken, Sh. I. P. Khaitan would communicate the same to me or CBI Vs. Ravi Kant Ruia and others Page 443 of 526 to Sh. Ganesan, so that the same would be taken in the board meeting and once the meeting was over, the minutes would come to me for signature. The minutes would be sent to me either by Sh. Ganesan or by someone from the office of company secretary of BPL Communications Limited. In the ETHL, I was looking after administrative work. While looking after administrative work, I also looked after Term loan documentation on behalf of the company.
I have been shown minutes book (D19), already Ex PW 34/A, of BPL Communications Limited, later on known as LMHIL. In this minutes book, I have been shown the minutes dated 20.09.2005, 31.10.2005, 10.01.2006, 17.01.2006, 30.03.2006, 01.06.2006, 09.07.2006, 27.07.2006, 18.09.2006, 23.10.2006, 20.12.2006 and 24.03.2007. All these bear my signature/ initial at point A and the same are now Ex PW 95/A1 to A 12 .
Ques: Did you ever sign the minutes book of this company after leaving the Essar group?
Ans: That is correct.
Ques: Why did you so sign, when you had left the company?
Ans: After resigning from Essar, I had communicated the same to Sh. I. P. Khaitan also, but to maintain a proper quorum for the board meetings, he asked me to continue as a director and attend the board meetings whenever necessary. I mean that even after leaving my employment, I continued to be a director on the board of this company."
Thus, Sh. Ratanraj Packiarajan in his examination inchief itself, very categorically deposed that he worked on the board of BPL Mobile Communication Limited as per instructions of Sh. I. P. Khaitan.
This witness was crossexamined by the learned CBI Vs. Ravi Kant Ruia and others Page 444 of 526 Public Prosecutor wherein also he affirmed that he was working for I. P. Khaitan. His crossexamination, pages 4 and 5, reads as under:
"It is wrong to suggest that it was Sh. Vikash Saraf who directed me to come on the board of BPL Communications Limited, later on LMHIL. I came on the board of this company on the asking of Sh. I. P. Khaitan. It is wrong to suggest that I am wrongly introducing the name of Sh. I. P. Khaitan. It is wrong to suggest that I became director on the board of this company just to sign the board minutes. I became director to execute the decisions taken by Sh. I. P. Khaitan. It is wrong to suggest that Sh. I. P. Khaitan had nothing to do with LMHIL. He was the owner of the company. It is wrong to suggest that this company was held by Essar group and not by I. P. Khaitan. It is wrong to suggest that no meetings of the board of this company were held physically. It is wrong to suggest that the minutes were prepared on the instructions of Vikash Saraf and I just signed the same. It is correct that Ms. Sangeeta Lakhi and Sh. Parsuram Dave were more qualified in company matters than me. It is correct that I was less qualified, but signed the board minutes. However, it is wrong to suggest that I was used to sign the fake minutes, as I was lesser qualified. It is wrong to suggest that apart from being acquainted with the words "shares" and "debentures" I do not understand the nature of the transactions shown to have been transacted in the aforesaid board meetings......."
In his crossexamination by the defence, he reiterated the same position. His crossexamination, pages 8 and 9, reads as under:
"The minutes book (D19) where in minutes dated 31.05.2007, already Ex PW 34/A1; 18.07.2007, CBI Vs. Ravi Kant Ruia and others Page 445 of 526 already Ex PW 34/A2; 04.08.2007, already Ex PW 34/A3; 03.09.2007, already Ex PW 34/A4; 15.10.2007, already Ex PW 34/A5; 24.10.2007, already Ex PW 34/A6; 08.11.2007, already Ex PW 34/A7; 03.12.2007, already Ex PW 34/A8, 19.12.2007, already Ex PW 34/A9; 07.01.2008, already Ex PW 34/A10; and 08.02.2008, already Ex PW 34/A11, have been shown to me and these meetings were physically attended by me.
After going through the minutes dated 18.07.2007, already Ex PW 34/A2, I say that the same have been correctly recorded.
I have been shown photocopies of four letters dated 19.12.2005, 26.12.2005, 10.02.2006, look like to be this date as the date is blurred, and 07.07.2006 and these letters were written by me and are now Ex PW 95/DA to DD. It is correct that these letters were written by me to Hutchison Essar on the instructions of I. P. Khaitan. Contents of these letters are correct.
Court Ques: How could you say that the contents of these letters are correct?
Ans: These are correct as per the instructions of I. P. Khaitan."
PW 95 Sh. Ratan Raj Packiarajan deposed that the minutes in the minute book of BPL Communications Limited, later on Loop Mobile Holding (India) Limited (LMHIL) were signed by him. In his crossexamination, he reaffirmed that these minutes were correctly recorded. In his examinationin chief as well as crossexamination by the learned Public Prosecutor, he deposed that he came on the board of this company to execute the decisions of I. P. Khaitan. There is no contrary material on record to discard his testimony. This testimony of the witness was not challenged by the prosecution CBI Vs. Ravi Kant Ruia and others Page 446 of 526 and is now binding on it. Let me take note of the law on this point.
In authority reported as Rammi @ Rameshwar Vs. State of MP, (1999) 8 SCC 649, Hon'ble Supreme Court observed about the scope of reexamination in paragraphs 17 to 19 as under:
"17. There is an erroneous impression that re examination should be confined to clarification of ambiguities which have been brought down in cross examination. No doubt, ambiguities can be resolved through reexamination. But that is not the only function of the reexaminer. If the party who called the witness feels that explanation is required for any matter referred to in crossexamination he has the liberty to put any question in reexamination to get the explanation. The Public Prosecutor should formulate his questions for the purpose. Explanation may be required either when the ambiguity remains regarding any answer elicited during cross examination or even otherwise. If the Public Prosecutor feels that certain answers require more elucidation from the witness he has the freedom and the right to put such questions as he deems necessary for that purpose, subject of course to the control of the court in accordance with the other provisions. But the court cannot direct him to confine his questions to ambiguities alone which arose in crossexamination.
18. Even if the Public Prosecutor feels that new matters should be elicited from the witness he can do so, in which case the only requirement is that he must secure permission of the court. If the court thinks that such new matters are necessary for proving any material fact, courts must be liberal in granting permission to put necessary questions.CBI Vs. Ravi Kant Ruia and others Page 447 of 526
19. A Public Prosecutor who is attentive during crossexamination cannot but be sensitive to discern which answer in crossexamination requires explanation. An efficient Public Prosecutor would gather up such answers falling from the mouth of a witness during crossexamination and formulate necessary questions to be put in reexamination. There is no warrant that reexamination should be limited to one or two questions. If the exigency requires any number of questions can be asked in re examination."
In another authority reported as Vishwanath Vs. State of Maharashtra, 1995 CrLJ 2571, Hon'ble Bombay High Court while dealing with such a situation observed in paragraph 13 as under:
"........It is not necessary to state that this was the last nail in the coffin of the prosecution. As a mater of fact, the prosecution had given a godsent opportunity to accused by examining such a witness as a prosecution witness. As it that was not sufficient the prosecution after this kind of crossexamination also failed to crossexamine the witness further. After all, if this witness had seen something and if the witness had stated everything that was nothing but the defence of the accused, nothing prevented the Additional Public Prosecutor from cross examining the witness. Nothing was done. The witness has specifically proved, therefore, as in case of the panch, that nothing happened on the tea table, the money did not pass on the teatable and there was no conversation at the teatable. These two witnesses have therefore, taken out the whole wind out of the shield of the prosecution and have completely white washed the evidence given by the complainant. The whole incident, therefore, has been shrouded in mystery."CBI Vs. Ravi Kant Ruia and others Page 448 of 526
Similarly, in a case titled Surinder Singh Vs. State (NCT of Delhi), Criminal Appeal 684 of 2008, decided on 16.10.2014, Hon'ble Delhi High Court dealing with similar situation observed in para 9 as under:
"A strange feature of the crossexamination of PW8 was that he made statements therein which were contrary to the case of the prosecution and yet no attempt was made by the APP to reexamine PW8 to seek clarifications or seek correction of the judicial record. The said statements made by PW8 in his crossexamination read thus:
"It is wrong to suggest that the accused demanded or accepted Rs. 1000/ as bribe from the complainant and kept the same in the left pocket of the shirt. It is also wrong to suggest that any such notes were recovered from his possession. It is also wrong to suggest that I took the right hand wash of the accused as stated by me in the examination chief."
Thus, the evidence on record shows that the applications for 21 UAS licences were decided to be filed on the instructions of Sh. I. P. Khaitan. Perusal of evidence of these witnesses reveals that the decision to file applications for 21 UAS licences was taken at the instance of Sh. I. P. Khaitan. There is no material in the deposition of these witnesses indicating any criminality.
Filing of Applications for 21 UAS Licences
417. It is the case of the prosecution that applications for 21 UAS licences were got filed by the accused persons through innocent employees, who were not knowing about the CBI Vs. Ravi Kant Ruia and others Page 449 of 526 conspiracy. It is the case of the prosecution that these employees were acting on the directions of Sh. Vikash Saraf and Sh. Vikash Saraf was working at the instance of other accused.
On the other hand, the case of the defence is that these applications were filed on the directions of Sh. I. P. Khaitan. It is the case of the defence that no other accused was involved.
Let me take note of the evidence on record.
418. Loop Telecom Limited, earlier known as Shipping Stop Dot Com (India) Private Limited, filed applications for 21 UAS licences.
PW 55 Sh. P. R. Karnik, DGM (Transmission and Planning), ETIPL, who signed and filed the applications for UAS licences, in his examinationinchief dated 18.04.2013, pages 1 to 4, deposed as under:
".......In September 2006, I left Tatas and joined Essar group as DGM (Transmission and Planning), in Essar Telecom Infrastructure (P) Limited (ETIPL). I worked there till March 2009. From April 2009, I joined Loop Telecom (P) Limited as DGM (Transmission and Planning). I remained there till October 2009 and from November 2009 I joined Vodafone Essar South Limited as DGM (Transmission, Planning and Operations). I left this job in June 2012.
While I was working in ETIPL I was looking after National Long Distance Planning for a company known as Shipping Stop Dot Com (India) (P) Limited, then an Essar group company. Sh. Ajay Madan was Chief Executive Officer (CEO) of ETIPL.
Filing of applications and Clause 8 CBI Vs. Ravi Kant Ruia and others Page 450 of 526 I have been shown 21 UASL applications of Shipping Stop Dot Com (India) (P) Limited for 21 service areas, except for Mumbai service area. All these have been signed by me at points A, which I identify and are already Ex PW 53/C1 to C21. In these applications, I have given a certificate at the time of filing these applications regarding compliance of clause 8 by the applicant company. This certificate has been signed by me as Sh. Ajay Madan, CEO, had told me that the company was compliant with clause 8. At that time, the company had been taken over by BPL Mobile and, as such, he told me that the company was in compliance with clause 8. At that time, Sh. Ajay Madan was one of the directors in BPL. When I signed these applications and the certificates therein, I was with ETIPL.
Ques: When you were with ETIPL, why did you sign these applications and certificates? Ans: Earlier while with the Essar group, I was looking after NLD planning for Shipping Stop Dot Com (India) (P) Limited and also correspondence with DoT. So, Sh. Ajay Madan told me that since BPL had licence only for one circle, that is, for Mumbai, and the Government had announced the policy of firstcome firstserved, we need to file applications for these 21 circles also. He further told that now Shipping Stop Dot Com (India) (P) Limited was no longer with Essar group and it will be taken over by BPL and since I had all the data and projections of NLD business, I was directed to help BPL in filing these applications.
The figures pertaining to business plan were given to me by Sh. Amit Gupta and his team, which I filled up in these applications. The shareholding structure was given by Sh. Durgesh Dingankar, company secretary of BPL.
Ques: Who helped you in preparing and filing these 21 applications?
Ans: The shareholding structure of BPL was CBI Vs. Ravi Kant Ruia and others Page 451 of 526 provided by Sh. Somasundaram, CEO of BPL through his company secretary, and business plan and financial projections were provided by Sh. Amit Gupta and his team.
At that time, Sh. Amit Gupta, either AVP or VP, was working with some company of Essar group. His team consisted of Sh. Jayan D'souza, GM, and Sh. Anupam Gupta, who was some executive. All of these were from Essar.
Ques: The aforesaid applications are accompanied by some annexures. Where from you got these annexures or who provided you the same? Ans: The shareholding pattern was given by Sh. Durgesh Dingankar. Business projections were given by Sh. Jayan D'souza and Sh. Anupam Gupta, as stated above. Copy of resolution dated 16.08.2007 passed by board of Shipping Stop Dot Com (India) (P) Limited was given by Sh. Durgesh Dingankar, company secretary of BPL. Other documents annexed with the applications were also given by him.
I was authorized by an authority, which I do not remember, to submit and collect documents to/ from DoT. These documents were given to me by Durgesh for submitting to DoT and I was told to do so by Sh. Ajay Madan. Sh. Ajay Madan also told me that my name was also included in the list of authorized signatories for this purpose. A board resolution was also given to me in this regard, but I do not remember on which company's letter head it was......."
In his deposition, Sh. P. R. Karnik blamed Sh. Ajay Madan for making him to sign the certificate that the company was compliant to Clause 8. Here, he also named Sh. S. Subramaniam, Sh. Amit Gupta, Sh. Jayan D'souza, Sh. Anupam Gupta and Sh. Durgesh Digankar, all of whom are witnesses for the prosecution. It may be noted that he did not name any of CBI Vs. Ravi Kant Ruia and others Page 452 of 526 the accused.
PW 55 Sh. P. R. Karnik in his further examinationin chief, pages 4 to 6, regarding reply to letter dated 12.12.2007 issued by DoT to the company seeking clarifications, deposed as under:
".......I have been shown letter dated 10.12.2007, already Ex PW 53/C23, received from DoT asking for clarifications of certain queries mentioned therein. I have been shown letter dated 11.12.2007 written by Sh. D. B. Sehgal to the DoT asking for time for the required clarifications. I identify signature of Sh. D. B. Sehgal at point B and is now Ex PW 55/A (D165). I have also been shown letter dated 12.12.2007 written by me to the DoT, already Ex PW 53/C24, submitting therewith the clarifications sought for by DoT. My signatures appear at points A and B, which I identify. I do not remember as to who had given the data for clarifications to me, but it was from BPL people and some facts were taken from earlier documents. Board resolution dated 11.12.2007, already Ex PW 53/C25 is the same resolution by which I was authorized to correspond with the DoT. The annexures sent with Ex PW 53/C24, pages 113 to 278, do not bear my signature anywhere. The index annexed with this letter bears signature of Sh. D. B. Sehgal at point A. Document at pages 114 to 118 bear signature of Sh. D. B. Sehgal at point B and that of Sh. Priyadarshi Sidhrath at point A. Rest of the documents bear signature of Sh. Priyadarshi Sidharath at point A. Document mentioned at page 160 of this exhibit was provided to me by Sh. Priyadarshi Sidhrath. It speaks about details of promoters of Loop Telecom (P) Limited, which are three in number as mentioned therein. Documents mentioned at page 194 was also provided by Sh. Priyadarshi Sidharath, which page is already Ex PW 16/E. This speaks about equity shareholding BPL CBI Vs. Ravi Kant Ruia and others Page 453 of 526 Communications Limited.
Document at page 195 of the aforesaid letter speaks about shareholding pattern of BPL Mobile Communication Limited and this page is already Ex PW 16/F. This document was also provided to me by Sh. Priyadarshi Sidhrath. The document at page 276 speaks about compliance of clause 8, that is, it is a certificate in this regard and the same is already Ex PW 53/C26. This was also provided to me by Sh. Priyadarshi Sidhrath.
Certificate already Ex PW 53/C28 bears the signature of Priyadarshi Sidharath at point A. It is also regarding clause 8. It was not sent by me to the DoT. Certificate already Ex PW 53/C30 is also a certificate under clause 8 under UASL Guidelines and it also bears signature of Sh. Priyadarshi Sidhrath at point A. Ques: After looking at the four certificates, would you please tell this Court if the company was compliant with clause 8 of the UASL guidelines? Ans: I only forwarded the documents to DoT which were given to me by the company secretary and other people, so I have no authority to say if the company was compliant or not as I have no knowledge about that."
Here, PW 55 Sh. P. R. Karnik deposed that documents submitted to DoT vide letter dated 12.12.2007 were provided by Sh. D. B. Sehgal and Sh. Priyadarshi Sidharath, both of whom are also witnesses for prosecution.
PW 55 Sh. P. R. Karnik in his crossexamination, deposed that all documents were signed by Sh. S. Subramaniam. He also deposed that the certificates, Ex PW 53/C26, 53/C28 and PW 53/C30, were signed by Sh. Priyadarshi Sidharath. In crossexamination, pages 8 to 10, he deposed as under:
CBI Vs. Ravi Kant Ruia and others Page 454 of 526"It is correct that as per resolution already Ex PW 53/C, Sh. Somasundaram Subramnaiam, amongst others, was also authorized alongwith me. It is correct that on pages 21, that is, memorandum and articles of association, page 45, that is, letter written on behalf of Shipping Stop Dot Com (India) (P) Limited, dated 18.09.2007, page 75, that is, resolution of Loop Telecom (P) Limited dated 31.08.2007, page 79, that is, power of attorney dated 16.10.2007, page 80, that is, memorandum and articles of association of Loop Telecom (P) Limited, page 81, that is, certificate of incorporation of Onchannel Software (P) Limited, page 82, that is, fresh certificate of incorporation in the name of Shipping Stop Dot Com (India) (P) Limited by changing the name of Onchannel Software (P) Limited, page 83, that is, fresh certificate of incorporation issued in the name of Loop Telecom (P) Limited by changing the name of Shipping Stop Dot Com (India) (P) Limited, page 84, that is, memorandum of association of Loop Telecom (P) Limited, pages 85 to 96, that is, other pages of memorandum of association, page 97, that is, articles of association of Loop Telecom (P) Limited, and pages 98 to 109, that is, the other pages of articles of association, signatures/ initials of Sh.
Somasundaram Subramaniam appear at point A and these documents were sent alongwith the applications to DoT. Volunteered : All these documents pertaining to applications for UAS licences for 21 service areas were taken to S. Subramaniam and he signed a few of the documents and later on he refused to sign further documents as documents were voluminous and asked me to sign the further documents as I was also authorized to do so vide aforesaid resolution.
He signed few of documents which were required to be signed by the director, in all the 21 applications. It is correct that after these applications were ready to be filed with the DoT, I showed them CBI Vs. Ravi Kant Ruia and others Page 455 of 526 to Sh. Ajay Madan and Sh. S. Subramaniam, who reviewed the same and approved the same for filing before the DoT.
It is correct that Sh. S. Subramaniam also signed some of the documents which were sent as annexures with the letter dated 12.12.2007, Ex PW 53/C24. Again said, he did not sign any document and instead asked Sh. Priyadarshi Sidhrath to sign the documents and he accordingly, signed the same. It is correct that before signing the documents, Sh. Priyadarshi Sidhrath confirmed the accuracy of documents from Sh. S. Subramaniam and only thereafter, signed the same. It is correct that some of these documents pertained to certification under clause 8.
Ques: I put it to you that at this time, Sh.
Somasundaram Subramaniam confirmed that I. P. Khaitan was ultimate owner of Loop Telecom (P) Limited and did not have any shareholding in any other licencee company?
Ans: He spoke to Priyadarshi Sidhrath and not me, but he spoke something like this.
It is correct that after reply Ex PW 53/C24 was prepared, it was shown to Sh. Ajay Madan and Sh. S. Subramaniam and they reviewed the same and okayed the same for being sent to DoT."
The gist of evidence of Sh. P. R. Karnik is that he signed and filed the applications on the asking of Sh. Ajay Madan and relevant documents and certificates annexed to the applications were signed by Sh. S. Subramaniam and Sh. Priyadarshi Sidharath. He did not name any of the accused nor is there any document from which their involvement can be inferred. Thus, this witness is also of no avail to the prosecution. He is a very important witness as it is he who had filed the applications. His deposition goes to the root of the case.
CBI Vs. Ravi Kant Ruia and others Page 456 of 526419. PW 59 Sh. Priyadarshi Sidharath, Company Secretary, Loop Telecom Limited, who had also signed certain documents and certificates submitted to DoT on behalf of the company, in his examinationinchief dated 06.06.2013, pages 1 to 3, deposed as under:
".......I was appointed in Loop Mobile (India) Limited through a placement agency, whose name I do not remember now. I was interviewed for the job by Sh. S. Subramaniam, who was a director in the company at that time. During my tenure both with Loop Mobile (India) Limited and Loop Telecom (P) Limited, I kept reporting to Sh. S. Subramaniam.
I have been shown DoT file D165, wherein my attention has been invited to an application for UAS licence filed by Loop Telecom (P) Limited for UP (West) service area, already Ex PW 53/C24 collectively, pages 112 to 278. In this application, my attention has been invited to pages 114 to 123, 126 to 204, 206, 207, 209, 210, 212, 213, 215, 216, 218, 219, 221, 222, 224, 225, 227, 228, 230, 231, 233, 234, 236, 237, 239, 240, 242, 243, 245, 246, 248, 249, 251, 252, 254, 255, 257, 258, 260, 261, 263, 264, 266 to 278. All these bear my signature at point A. I have also been shown a certificate already Ex PW 53/C28, page 307, and another certificate, already Ex PW 53/C30, page 330, both these also bear my signature at point A. Ques: Your attention has been invited to the aforesaid pages of the UASL application filed by Loop Telecom (P) Limited. On each page, referred to above, you have admitted your signature at point A. Would you please tell this Court as to when did you append these signatures and at whose instance? Ans: I had appended the aforesaid signature almost at the time of my joining as Company Secretary of Loop Telecom (P) Limited and the signatures were appended on the asking of Sh. S. Subramaniam. Ques: Would you please tell this Court as to who CBI Vs. Ravi Kant Ruia and others Page 457 of 526 prepared the documents which bear your signature? Did you prepare the same?
Ans: I did not prepare these documents. I do not know who prepared these documents, but these were given to me by Sh. S. Subramaniam with the assurance that these documents were already checked up for accuracy and asked me to sign the same and I signed the same accordingly. Ques: Did you check up the veracity of the facts recorded in these documents?
Ans: No as Sh. S. Subramaniam had told me that documents were large in number and had also assured me that the same were correct. Ques: Did you have any idea about UASL Guidelines at the time of signing these papers?
Ans: No."
Thus, in the examinationinchief itself, this witness did not support the prosecution version. He deposed that documents were given to him by Sh. S. Subramaniam.
The gist of his testimony is that he signed the certificates on the asking of Sh. S. Subramaniam. He also did not name any of the accused. This version of the witness was not challenged by the prosecution either by reexamination or by crossexamination.
420. PW 53 is Sh. D. B. Sehgal. He is a retired officer of Indian Telecom Service, 1961 Batch. After retirement, he joined BPL Group as Adviser. Later on, he joined Essar Group. In his examinationinchief dated 17.04.2013, pages 8 to 14, he deposed about filing of applications for UAS licence in 21 service areas by Loop Telecom Limited and filing of Clause 8 Certificates by the company. His deposition reads as under:
Filing of applications CBI Vs. Ravi Kant Ruia and others Page 458 of 526 ".......I have been shown a copy of extract of resolution dated 16.08.2007 passed by Board of Directors of Shipping Stop Dot Com (India) (P) Limited , whereby I, alongwith Sh. Ajay Madan, Sh.
S. Subramaniam, Ms. Sangeeta Lakhi and Sh. P. R. Karnik, was authorized to sign the applications and other relevant documents for UAS Licences. The same is now Ex PW 53/C (D165), page 11. I have been shown application for UAS licence filed for UP (West) service area. The same has been signed by Sh. P. R. Karnik, whose signature I identify, at point A, page 6. The same is now Ex PW 53/C1. My name has been indicated at serial 4 of the application as authorized contact person. The applications were filed for UAS licence in 21 service areas, out of 22 telecom service areas, except Mumbai service area.
Similarly remaining 20 applications have also been signed by Sh. P. R. Karnik at point A and I have been shown as authorized contact person at serial No. 4. These applications are now Ex PW 53/C2 to C21 (D167 to 186).
As per serial 13 of these applications, there is list of telecom service licences held by the company and its allies/ sister concerns/ partners, as per clause
8. It is indicated therein that Shipping Stop Dot Com (India) (P) Limited was holding NLD licence and the service was still to commence. It also indicates that BPL Mobile Communication Limited was holding CMTS licence for Mumbai service area, which was operational at that time.
About clarifications I have been shown letter dated 18.10.2007 written by applicant company to DoT regarding issuance of LOI for UAS Licence, whereby the company had requested the DoT not to insist on no dues certificate at that stage for signing the UAS licence. This letter was written under my signature at point A and is now Ex PW 53/C22, page 54 (D165). Again DoT wrote a letter dated 10.12.2007 CBI Vs. Ravi Kant Ruia and others Page 459 of 526 asking the company to submit additional documents/ clarification/ supporting documents. The letter is now Ex PW 53/C23, page 66. The company submitted additional documents/ clarifications vide its letter dated 12.12.2007 under the signature of Sh. P. R. Karnik at point A, which I identify. The letter is now Ex PW 53/C24 with its annexures, page 112. An index to this letter at page 113 has been signed by me at point A. As per annexure II (c) to the aforesaid letter, page 122, there is an extract of resolution dated 11.12.2007 passed by the board of directors of the company to the effect that Sh. Ajay Madan and or Sh. S. Subramaniam and or Ms. Sangeeta Lakhi and or Sh. D. B. Sehgal, that is, myself, and or Sh. Prasad Karnik, were authorized to sign and execute the UAS licence applications, agreements etc. The same is now Ex PW 53/C25 .
I have been shown annexure XX to the aforesaid letter dated 12.12.2007, which is a certificate under clause 8 of UASL Guidelines 14.12.2005. This has been signed by company secretary Sh. Priyadarshi Sidharath at point A, which I identify. The same is now Ex PW 53/C26, page
276. Letter regarding clause 8 I have been shown a letter dated 07.01.2008 written by Loop Telecom (P) Limited to DoT under my signature at point A regarding compliance of clause 8 by the company and a fresh certificate under clause 8 was attached with it indicating that company was compliant with this clause, which has been signed by Sh. Priyadarshi Sidharth, company secretary, at point A. The letter is now Ex PW 53/C27 and the certificate is now Ex PW 53/C28, pages 306 and 307. Another copy of this letter alongwith certificate is also available in DoT file D166, at pages 415 and 416 respectively. This copy was given in Central Registry while earlier copy was CBI Vs. Ravi Kant Ruia and others Page 460 of 526 given directly in the AS cell. These two documents are now Ex PW 53/C28(A) and (B) respectively. I have been shown letter dated 10.01.2008 written by company to DoT under my signature whereby a revised certificate under clause 8 was sent to the DoT intimating it about compliance of this clause by the company. The letter is now Ex PW 53/C29. A certificate dated 09.01.2008 under clause 8 signed by Sh. Priyadarshi Sidhrath at point A was attached with this letter and the certificate is now Ex PW 53/C30. Another copy of this letter as well as the certificate is also available in file D166 at pages, 417 and 418. These are now Ex PW 53/C30(A) and (B). I have been shown 21 LOIs dated 10.01.2008 issued to the company by DoT, in this file and the same are now Ex PW 53/D1 to D21, pages 308 to
328. Compliance to LOI I have been shown DoT file D166, wherein I have been shown letter dated 10.01.2008, written by the company to DoT regarding unconditional acceptance of LOIs for all 21 service areas. This letter is written under my signature at point A and is now Ex PW 53/E, page 19. The company submitted its compliances with the DoT on the same day, that is, 10.01.2008, for all 21 service areas. These compliances for 21 service areas are now Ex PW 53/E1 to E21.
Court Ques: Why certificate regarding clause 8 was required to be submitted by the DoT repeatedly? Ans: Certificates are the same, but wordings were not as per draft certificate given by the DoT vide its letter dated 10.12.2007. Accordingly, these certificates were submitted afresh.
Letter regarding clause 8 I have been shown another letter dated 28.02.2008 written by company to DoT regarding compliance of substantial equity clause under my CBI Vs. Ravi Kant Ruia and others Page 461 of 526 signature at point A, alongwith which a fresh certificate regarding compliance of clause 8 by the company was sent, signed by the company secretary Sh. Priyadarshi Sidharath, whose signature I identify at point A. Another original copy of this letter as well as certificate is also available at pages 452 to
457. These are now Ex PW 53/E22 to E25 .
Signing of licence agreements I have been shown another letter dated 19.02.2008, written by company to DoT under my signature at point A, enclosing therewith power of attorney dated 18.02.2008 issued in my favour for the purposes of licence agreements. The letter is now Ex PW 53/E26 and power of attorney is Ex PW 53/E27. Accordingly, I signed licence agreements with DoT for 21 service areas and these agreements have been shown to me and the same are now Ex PW 53/F1 to F21 (D187 to 207). My signature appears at point A on each page of each agreement.
I did not go to collect the LOIs from DoT on 10.01.2008. Sh. A. S. Narayanan, perhaps manager in the company, had gone to DoT for collecting the LOIs. I had authorized him to do so. I was authorized by the board to interact and liaison with the DoT. I am unable to recall as to who had intimated me about my being so authorized by the board of the company.
Satisfaction about clause 8 Ques: You had forwarded certificates regarding compliance of clause 8 by the applicant company to the DoT on numerous occasions through your letters. How were you convinced that the applicant company was compliant with the aforesaid clause? Ans: I was satisfied that the company was compliant with clause 8 on the basis of certificates issued by the company secretary, who was the competent person to do so, as he is supposed to know the equity structure of the company.
CBI Vs. Ravi Kant Ruia and others Page 462 of 526I never had any interaction with any of the board member or the company secretary regarding the company being compliant with the clause 8 of UASL Guidelines, as the same was not within my domain. I simply forwarded the certificates to the DoT.
Ques: You were Advisor to the Essar group and getting remuneration from that group. Then how did you liaison with the DoT on behalf of Shipping Stop Dot Com (India) (P) Limited / Loop Telecom (P) Limited?
Ans: I was the only senior person based in Delhi. After I joined Essar group in 2006, I was asked to continue to look after the regulatory work relating to BPL Mobile also.
Court Ques: Who asked you to do this?
Ans: I cannot recall the exact name as I was in touch with various senior persons including Vikash Saraf, Ajay Madan, Rajiv Aggarwal etc., and CEO of BPL Mobile Communication Limited Sh. S. Subramaniam. Any one of them may have asked me to do so."
In the examinationinchief, this witness did not name any of the accused for filing of applications or for filing of certificate of clause 8. His deposition is a plain narrative of events.
This witness in his examinationinchief itself deposed that he was satisfied that the company was compliant to Clause 8. He was crossexamined by the prosecution wherein he told that Vikash Saraf told him that the company was compliant to Clause 8, but it was so told in 2009. The applications were filed in 2007. Thus, his testimony does not contain anything which can be construed to be even remotely CBI Vs. Ravi Kant Ruia and others Page 463 of 526 against any of the accused. It is a plain narration of the events relating to filing of applications and other documents with the DoT. His deposition also is of no avail to the prosecution.
421. PW 63 Sh. Anupam Kishor Gupta was Manager (Finance) in Essar Group. He deposed that on the asking of either Sh. Amit Gupta or Vikash Saraf, he had helped in preparation of business plan for Loop Telecom Limited, which had applied for 21 UAS licences. His examinationinchief dated 01.08.2013, pages 2 and 3, reads as under:
".......I know that Loop Telecom Ltd. had applied for twenty one UAS licences. I was asked to help in preparation of business plan to be submitted with the application. Most probably, Sh. Amit Gupta or Sh. Vikash Saraf asked me to render this help. Some templates of business plan were already available in our system of Essar Spacetel and we used them in making business projections with the help of other market research. After preparing the business plan, we must have handed over the same either to Sh. Amit Gupta or Sh. Jayan D'souza. Again said, the same was given to Sh. Prasad Karnik, who used to work in a Essar company.
I have been shown D165, pages 199 to 267, which is a copy of business plans. These business plans are in the same format in which the business plans were prepared by us and the first page of the business plan is also correct, though, on flipping through the plans, I am unable to recall all the figures. This is part of Ex PW53/C24 (collectively)."
PW 63 Sh. Anupam Kishor Gupta in his cross examination, pages 3 and 4, deposed as under:
".......It is correct that when I was asked to prepare the business plans, I was also told that the promoters CBI Vs. Ravi Kant Ruia and others Page 464 of 526 of Loop Telecom Ltd. were closely related to promoters of Essar Group. It is also correct that since the two were related, I was asked to render the help......"
However, this witness is also an ambivalent witness, as he did not know for sure as to who had asked him to prepare the business plan, that is, either it was Sh. Amit Gupta or Vikash Saraf. He was also unsure as to whom the business plan was handed over. It was either Sh. Amit Gupta or Sh. Jayan Dsouza. However, he corrected himself and said it was handed over to Sh. P. R. Karnik. In the end, his evidence is also of no avail to the prosecution.
422. PW 40 Sh. Amit Kumar Gupta, Consultant, Essar group, in his examinationinchief dated 24.01.2013, pages 4 to 6, deposed about filing of applications for UAS licences by Shipping Stop Dot Com (India) (P) Limited as under:
"...........When I joined Essar group as consultant in the year 2004, Sh. Vikash Saraf was heading Essar Telecom Business Group. Again said, he was incharge of telecom business. In the telecom business group, there was also a company by the name of Shipping Stop Dot Com (India) (P) Limited. This company had obtained long distance telephony licence (NLD), but had not operationalized the licence. I had given my services in putting together applications to DoT for obtaining telecom licences during my tenure as consultant for a company by the name Essar Spacetel Limited, an Essar group company.
I know Sh. Jayan D'souza and Sh. Anupam Kishore Gupta. Both used to report to me during my association with Essar group. It is in my knowledge that Shipping Stop Dot Com (India) (P) Limited had CBI Vs. Ravi Kant Ruia and others Page 465 of 526 also filed applications with the DoT for obtaining telecom licences. I had also participated in putting together these applications to the extent of asking my team to assist the company in preparing financial projections for the applications using our earlier experience for the same for Essar Spacetel Limited. I was told by Sh. Vikash Saraf that the company was applying for telecom licence and if it needed any help, we should provide it.
I know Sh. P. R. Karnik also. He used to work with Sh. Ajay Madan and had approached me to help with the financial projections for the licence applications.
I am acquainted with UASL Guidelines of 2005. I am also acquainted with clause 8 of these Guidelines. This clause says that no entity can own more than ten per cent equity in two companies operating telecom access licences in the same service area. I had no role in drafting clause 8 certificate filed with the applications of Shipping Stop Dot Com (India) (P) Limited. I also do not know as to who had signed this certificate. I even do not remember as to who is required to sign this certificate, but I can tell this after seeing the Guidelines.
I was on the board of ETHL, which I joined in January 2007 and continued on board till I left the Essar group in 2012. I came to know that Shipping Stop Dot Com (India) (P) Limited was being acquired by BPL Communications Limited, when told so by Sh. Vikash Saraf, when he asked me to help if they needed my assistance for the licence applications. As consultant I used to draw my fees from Essar Steel Limited. When I became an employee of Essar group, I used to draw my salary initially from Essar Steel Limited and thereafter, from Essar Investments Limited.................."
This witness did not name any of the accused asking him to do anything. He deposed that Shipping Stop Dot Com CBI Vs. Ravi Kant Ruia and others Page 466 of 526 (India) (P) Limited was transferred to BPL Communications Limited. His deposition is only to the effect that Sh. Vikash Saraf asked him to help, if any help was needed by Shipping Stop Dot Com (India) (P) Limited in filing applications. He had only helped in preparing financial projections.
PW 40 Sh. Amit Kumar Gupta in his cross examination dated 09.04.2013, pages 2 to 4, deposed about the filing of applications for UAS licences by Shipping Stop Dot Com (India) (P) Limited. His deposition reads as under:
"...........It is correct that somewhere in July 2007, Vikash Saraf had informed me that I. P. Khaitan had decided to apply for 21 UAS licences. It is correct that Vikash Saraf asked me to provide any reasonable assistance that Sh. I. P. Khaitan may require for this. I do not recall if Vikash Saraf told me that he had agreed with I. P. Khaitan to depute Sh. Ajay Madan to Loop Telecom Limited temporarily pending recruitment of independent CEO by it. However, I knew that Ajay Madan was temporary CEO of Loop Telecom Limited. It is correct that Sh. Prasad Karnik was an Essar employee and he was known to me. It is correct that he used to report to Sh. Ajay Madan. Prasad Karnik had met and told me that Ajay Madan had told him that he (Prasad Karnik) should help Loop Telecom Limited to prepare and submit 21 UAS licences. It is correct that he also told me that Ajay Madan had requested him to inform me to help in preparing business plan for these 21 UAS licences. Ajay Madan knew that I had experience in preparing business plan as I had done for Essar Spacetel Limited. It is correct that on this, I asked Sh. Jayan D'Souza, who was working with me, to provide these financial projections. It is correct that for this, I asked Jayan to use financial templates which were prepared at the time of submitting application of Essar Spacetel CBI Vs. Ravi Kant Ruia and others Page 467 of 526 Limited. I do not recall if in December 2007, Prasad Karnik told me that DoT was requiring more detailed financial projections.
Ques: I put it to you that you and other members of the Essar team only helped Loop Telecom Limited in preparing business plans to be submitted alongwith applications for 21 UAS licences and beyond that you did not do anything?
Ans: This is correct as far as I am concerned, but I do not know about others.
Ques: Do you know that other employees of Essar involved in this exercise did any other thing other than preparing business plans?
Ans: For my team, this is correct, as they did nothing beyond preparing the business plans, but I cannot say about others............"
In this deposition also he is categorical that applications were filed on the asking of Sh. I. P. Khaitan and he only helped in preparing financial projections. Thus, his deposition is of no avail to the prosecution.
423. In the end, there is no evidence that any of the accused were involved in filing of applications that too with a view to obtain 21 UAS licences illegally. Only deposition is to the effect that the applications were filed on the asking of Sh. I.P. Khaitan who was the owner of Shipping Stop Dot Com (India) (P) Limited, later on Loop Telecom Limited.
Deposition of Chartered Accountants and Company Secretary
424. PW 15 Sh. R. Kirthivasan is a practicing Chartered Accountant, who practices under the name and style of M/s A. P. Rajagopalan and Co. He was chartered accountant to Loop Telecom Limited. In his examinationinchief itself, he deposed CBI Vs. Ravi Kant Ruia and others Page 468 of 526 that Essar Group and Loop Group are two different groups. His examinationinchief dated 03.10.2012, pages 1 to 5, reads as under:
"I passed my chartered accountancy in November 1987 and obtained my membership certificate in March 1988. I joined a partnership firm of chartered accountants known as AP Rajagopalan and Co. in March 1988 itself as a partner. Before my joining, Mr. A. P. Rajagopalan and Sh. Ganesh Rajagopalan were the two partners in this firm, who are my father and brother respectively. It is a middle size chartered account firm and looks after normal work of chartered accountancy like audit, statutory audit, income tax work etc. Since 1988, we are/ have been working for many firms including Essar Group, Loop Group, Asia Motorwork, Birla Surya etc. Our relationship with Essar group dates back to the year 1995 as we conducted secretarial audit of some of their group companies. The Essar group is composed of several verticals like steel, shipping, telecom, investment companies etc. Our firm has been dealing with small investment companies of the group since 1999. These companies are seven eight in number and includes companies by the name of Essar Biofuels Limited, Essar Cements Limited, Teletech Investments (India) Limited, Ipsha Commercial (India) Limited, S. K. Commercial (India) Limited etc. Apart from this, we also do attestation and certification work.
For carrying out our professional duties, we look into the books of the companies, vouchers, secretarial records and relevant information relating to the audit.
Ques: Could you please name the officials of the group companies of Essar group with whom you had the opportunity of interacting in the course of discharging your professional duties?
Ans: Basically I was dealing with the accountants of the companies, who were maintaining the accounts CBI Vs. Ravi Kant Ruia and others Page 469 of 526 like Sh. Mukesh Jain, Sh. Santosh Purohit, Sh. D. L. Shetty, Ms. Mohini Gaikar, Sh. Pankaj Chhangani, Sh. Kandarp etc. We have also been doing the audit relating work relating to Loop Group.
Ques: Who introduced you to Loop Group?
Ans: Sh. M. N. Ahmed of M/s Nissar and Kumar, chartered accountants, referred us to Loop Group in the year 2005 relating to the work of Santa Trading (P) Limited.
We carried out the assigned duties of the auditor pertaining to this company of Loop group. I have been shown certified true copy of financial account of Santa Trading (P) Limited (D58, Annexure 3A), which comprises audit report, balance sheet and notes to accounts for the financial year 200506. The same is now collectively Ex PW 15/A, running into twelve pages.
Similarly, I have been shown certified true copy of financial account of Santa Trading (P) Limited (D58, Annexure 3B), which comprises audit report, balance sheet and notes to accounts for the financial year 200607. The same is now collectively Ex PW 15/B, running into ten pages .
Similarly, I have been shown certified true copy of financial account of Santa Trading (P) Limited (D58, Annexure 3C), which comprises audit report, balance sheet and notes to accounts for the financial year 200708. The same is now collectively Ex PW 15/C, running into fourteen pages. The audit of this company for all the three financial years was conducted by me alongwith my audit assistant. All three documents bear my signature at point A. Ques: In para 4 (b) of notes to accounts to your reports Ex PW 15/B and 15/C for the financial years 200607 and 200708, it is mentioned that Ms. Kiran Khaitan and I. P. Khaitan are individuals indirectly owning interest in voting power of the company. Please explain what does it signify and based on what record you recorded this information?
CBI Vs. Ravi Kant Ruia and others Page 470 of 526Ans: Accounting Standard 18 requires to give disclosure in the audited account of all related parties, their relationship with the company, details of key managerial personnels and details of transaction of related parties mentioned herein before. This information was extracted from the secretarial records of the company, which gives details of shareholding pattern of the company and from the shareholding, the details of the holding company, subsidiary company and associate companies of this company. We went through those accounts after stating these details of the related parties to check out whether any transaction has happened with these parties and have given details of these transactions as has been mentioned in our reports Ex PW 15/B and 15/C .
As per the balance sheets for the years 200607 and 200708, Kiran Khaitan was having 9,999 shares in Santa Trading (P) Limited. The remaining one share was held by one nominee shareholder alongwith Kiran Khaitan. The name of I. P. Khaitan figures in these reports as he was a director in the company.
Ques: You have used the description "individuals indirectly owning interest in the voting power of the company" in your aforesaid reports. Please explain whether it refers to 9,999 shares or the remaining one share, jointly held by Kiran Khaitan and a nominee shareholder, or to both?
Ans: The clause, as such, refers to individuals, directly or indirectly, owning interest in the voting power of the company.
In the case of Kiran Khaitan, indirectly refers to one share which she is holding alongwith nominee shareholder and in the case of I. P. Khaitan it refers to entire 10,000 shares, which are being held by Mrs. Kiran Khaitan alongwith nominee shareholder.
Ques: In para 2 (iii)(B) of notes to accounts to your report Ex PW 15/A for the financial year 200506, it CBI Vs. Ravi Kant Ruia and others Page 471 of 526 is mentioned that Ms. Kiran Khaitan and I. P. Khaitan are individuals directly/ indirectly owning interest in voting power of the company. Please explain as to why the word "directly" have been used in this report when this word does not find mention in the remaining two reports, that is, Ex PW 15/B and 15/C?
Ans: It is a typographical mistake. The word "directly" must have also been used in the remaining two reports. However, meaning and intent of Accounting Standard 18 has been followed in these reports by using only the word "indirectly" and the typographical error is not of much significance.
A shareholder has a right to vote. I. P. Khaitan was an individual having an indirect interest in the voting power being a director as well as husband of Kiran Khaitan. I have not come across any document regarding any arrangement, but in normal Indian circumstance of relationship between husband and wife, the same is construed to be true as the husband may exercise his influence over his wife......."
This witness is categorical that Essar group and Kaitan group are different groups. He also explained the concept of indirectly owning interest in a company.
He had also given certificates which were filed in the DoT with the applications for UAS licences. About these certificates, he deposed in his examinationinchief, pages 6 and 7, as under:
"............I have been shown DoT file D165 (D41 in the main charge sheet)(already Ex PW 36/DL45), pertaining to UASL applications (21 service areas) from M/s Shipping Stop Dot Com (India) (P) Limited, now M/s Loop Telecom (P) Limited. In this file at pages 46 and 47, there is a certificate CBI Vs. Ravi Kant Ruia and others Page 472 of 526 pertaining to ultimate foreign shareholding in this company. This certificate was issued by me and bears my signature at point A. The certificate is now Ex PW 15/D. The certificate also has an annexure, which also bears my signature at point A and is now Ex PW 15/E .
In the same file, at page 189, there is a net worthcertificate as on 05.09.2007 pertaining to Shipping Stop Dot Com (India) (P) Limited, now Loop Telecom (P) Limited, which was also issued by me. The same is now Ex PW 15/F and it bears my signature at point A. At page 192, there is another net worth certificate as on 31.03.2007 pertaining to net worth of BPL Communications Limited and this was also issued by me. It bears my signature at point A and is now Ex PW 15/G .
At the time of issuance of certificate Ex PW 15/F, I had seen the books of account of the company up to 05.09.2007 duly updated and last audited balance sheet as on 31.03.2007. At the time of issuance of certificate Ex PW 15/G, I had seen the last audited balance sheet as on 31.03.2007. Sh. Durgesh had approached me for issuing these two certificates. He told me that this certificate was required for some tender application........."
This witness had given various certificates annexed to the applications. He also deposed that Khaitan group and Essar group are different groups, but the prosecution did not challenge his testimony by way of reexamination or cross examination.
In his crossexamination, pages 7 to 10, he reiterated the same as under:
"..........As a statutory auditor, it is my duty to act independently. I am conversant with all the statutory requirements for audit of a company. It is mandatory CBI Vs. Ravi Kant Ruia and others Page 473 of 526 for me to follow Accounting Standard 18 as laid down by Institute of Chartered Accountants of India. I have been shown D398, which is a copy of Accounting Standard (AS) 18. The same is correct and a chartered accountant is required to follow it.
The same is now Ex PW 15/DA
.
I have been shown annexures 2 A to 2C of
D58, which are audited balance sheets of BPL Communications Limited for the years ended 31.03.2006, 31.03.2007 and for the period from April 2008 to September 2008. These balance sheets were audited by me. The same are now Ex PW 15/DB, DC and DD. I have also been shown annexures 1A, 1B and 1C to D58, which are audited balance sheets of Shipping Stop Dot Com (India) (P) Limited for the years ended 31.03.2006 and 31.03.2007 and Loop Telecom (P) Limited for the year ended 31.03.2008. These were audited by me and each page bear my signature. The same are now Ex PW 15/DE, DF and DG. While conducting these audits, I complied with the requirements of AS 18.
AS 18 requires certain disclosures to be made pertaining to related parties. The first type of disclosure is of nature of related parties, that is, associate companies, holding company etc. Two factors are required to be further considered: first is existence of control and second is existence of significant influence. It is also required to be seen if there has been any transaction between the parties. As per Ex PW 15/DB,BPL Communications Limited has invested Rs. 2421 crore in multi optional convertible debentures. These debentures were of Essar Investment Limited and the same were purchased from Essar Teleholdings Limited. If Essar Investment Limited and Essar Teleholdings Limited were associates, it would have been mentioned in audited balance sheet, as per the requirements of AS
18. It is correct that these two companies were not associates. There is no related party disclosure regarding any Essar group company in all the CBI Vs. Ravi Kant Ruia and others Page 474 of 526 audited balance sheets proved by me before this Court.
Before our taking the audit work of Santa Trading (P) Limited, M/s Nissar and Kumar were dealing the audit work of this company. I started the audit work of this company when this company was transferred to Khaitan group. Afterwards I also started conducting audit of other Loop group companies, namely, Loop Telecom Limited, Loop Mobile Holdings (India) Limited, Loop Telecom Infrastructure Limited etc. In this work, employees only of Loop group used to help me. When I did the audit work of Essar group companies, employees only of Essar group used to assist me. I used to check the statutory record of Loop group at its Mahim Office, Mumbai. It is correct that Essar group and Loop group are two different groups.
It is correct that as on 31.03.2006 Essar Investment Limited owed Rs. 2421 crore to BPL Communications Limited. As per balance sheet Ex PW 15/A, Santa Trading (P) Limited had issued non convertible debentures of 304 crore to various parties, as mentioned at point A, schedule 2, pertaining to unsecured loans. It is in the nature of debt I have been shown DoT file D148 pertaining to UAS Licence to Loop Telecom (P) Limited. In this file, there are copies of certificates at pages 36 and 37, Ex PW 15/DH, 38 and 39, Ex PW 15/DH1, 44 and 45, Ex PW 15/DH2, 46 Ex PW 15/DH3, 47 Ex PW 15/DH4, 206 Ex PW 15/DH5, 207 Ex PW 15/DH6 and 208 Ex PW 15/DH7. All these certificates were issued by me and they bear my signature.........."
This witness was chartered accountant to Loop Telecom Limited and deposed that AS18 was duly followed during audit of the company. He deposed that Essar group and CBI Vs. Ravi Kant Ruia and others Page 475 of 526 Loop group are different groups. He also deposed that all the certificates were signed by him. He also deposed that STPL was transferred to Khaitan group when he took the audit work of this company. He also deposed that Essar Investment Limited owed Rs. 2421 crore to BPL Communications Limited, but it was in the nature of debt. However, this version of the witness was not challenged by the prosecution either by reexamination or crossexamination. He also deposed that for relation of "Associate", two factors are required to be considered, that is, existence of control and significant influence, for which there is no evidence on record in relation to Loop Telecom Limited. Thus, his deposition is also of no avail to the prosecution and helps the defence. The prosecution is now bound by his deposition. In an authority reported as Kunju Muhammed alias Khumani and Another Vs. State of Kerala, (2004) 9 SCC 193, Hon'ble Supreme Court while dealing with such a witness observed in paragraph 16 as under:
"We are at pains to appreciate this reasoning of the High Court. This witness has not been treated hostile by the prosecution, and even then his evidence helps the defence. We think the benefit of such evidence should go to the accused and not to the prosecution. Therefore, the High Court ought not to have placed any credence on the evidence of such unreliable witness."
425. It is also interesting to take a look on the deposition of PW 16 Sh. V. V. Chakradeo, a practicing company secretary. He had issued the various certificates for Shipping Stop Dot Com (India) (P) Limited, when it filed applications for 21 UAS CBI Vs. Ravi Kant Ruia and others Page 476 of 526 licences. His examinationinchief dated 03.10.2012, pages 1 and 2, reads as under:
"I am practising company secretary and run my profession under the name V. V. Chakradeo and Co. I do certification of returns required to be filed before various statutory authorities like Registrar of Companies, compliance certificates and procedural formalities for shifting of registered office of the company from one state to another. I have been shown DoT file D165 pertaining to UASL application of M/s Shipping Stop Dot Com (India) Limited. In this file, at pages 7, 9, 10 and 18, there are copies of certificates issued by me all pertaining to Shipping Stop Dot Com (India) (P) Limited. These bear my signature at point A and are now Ex PW 16/A to 16/D. Certificate Ex PW 16/A shows the shareholding pattern of Shipping Stop Dot Com as on 01.09.2007. Certificate Ex PW 16/B shows that the foreign shareholding in the company was within 74% as prescribed by Department of Industrial Policy and Promotion as on 01.09.2007. Certificate Ex PW 16/C shows paid up equity capital of the company as on 01.09.2007. Certificate Ex PW 16/D with annexure at page 20 shows the foreign shareholding as on 04.09.2007.
In the same file, at pages 194 and 195, there are certificates issued by me pertaining to BPL Communications Limited and BPL Mobile Communications Limited respectively. These bear my signature at point A and are now Ex PW 16/E and 16/F. These certificates show equity shareholding of these companies as on 12.12.2007.
Certificates Ex PW 16/A to 16/D were issued by me on the asking of Sh. Girish Sathe. He asked me that some certification of a company was required to be done and if I was willing to do that, to which I replied in the affirmative. I went to the office of the company where I examined register of CBI Vs. Ravi Kant Ruia and others Page 477 of 526 members of the company, bank statements and other related documents before issuing these certificates.
Certificates Ex
PW 16/E and 16/F were also
issued by me on the asking of Sh. Girish Sathe after examining the related documents.
I have been doing certification work for Essar group also since 1990. Sh. Girish Sathe is also a company secretary. I got acquainted with him through a common friend. At that time, when he asked me for the certification work, he was working with Essar group. I receive remuneration for the services given by me through cheque. I know Sh. V. Giri also, who is working with Essar group............"
In this deposition, PW 16 deposed that he had issued the certificates for Shipping Stop Dot Com (India) (P) Limited after examining the register of members, bank statements and other related documents. He deposed that he was introduced to the company by Sh. Girish Sathe. It is also interest to take a look on his crossexamination, pages 3 and 4, which reads as under:
"...........It is correct that I did not issue certificates Ex PW 16/A to 16/F on the asking of Sh. Girish Sathe.
However, he had asked me go to the company where I will be asked to do this certification work.
I was called to the CBI office, where my statement was recorded on 29.08.2011. It is correct that I did not state to the IO about certificates Ex PW 16/E and 16/F. It is correct that I also did not mention Sh. Girish Sathe to the IO in reference to certificates Ex PW 16/E and 16/F as I was not asked. When the certification work was done by me regarding certificates Ex PW 16/A to 16/F, Shipping Stop Dot Com was not a group company of Essar group. Volunteered: Nobody was knowing me in the company, so I found it out from the record/ books CBI Vs. Ravi Kant Ruia and others Page 478 of 526 and shareholding of the company.
Sh. Girish Sathe asked me if I was interested in doing certification work, I could go to the company. It was just a reference as I am an independently practising company secretary and many times I get such references. This reference was unconnected with the work of Sh. Girish Sathe. The payment for these services was received by me from respective companies, that is, remuneration for certificates Ex PW 16/A to 16/D was received from BPL Communications Limited. I do not remember as to which company made the payment for certificates Ex PW 16/E and 16/F. However, the payment must have come from the companies in whose favour the certificates were issued..................."
In his crossexamination, he deposed that when the certification work was done, Shipping Stop Dot Com (India) (P) Limited was not a group company of Essar. He also deposed that Sh. Girish Sathe had only referred him to the company and reference was unconnected with the work of Sh. Girish Sathe. Thus, the gist of his deposition is that Shipping Stop Dot Com (India) (P) Limited was not a company of Essar group.
This witness was reexamined by the prosecution. However, in the reexamination also, the witness deposed that Sh. Girish Sathe had only directed him to go to Shipping Stop Dot Com (India) (P) Limited as some work was available over there and he accordingly went to the company.
On this, prosecution again requested that the witness was resiling from his previous statement and may be allowed to be crossexamined. This prayer was also allowed and the witness was crossexamined. In the crossexamination by the CBI Vs. Ravi Kant Ruia and others Page 479 of 526 prosecution, he denied that he had issued the certificates Ex PW 16/A to D on the asking of Sh. Girish Sathe. Anyway, this witness also did not name any of the accused The reexamination and crossexamination of the witness by the prosecution shows that it (prosecution) knew that it had also to reexamine and crossexamine a witness, if needed. This was done in the case of this witness, that is, PW 16 V. V. Chakradeo. However, this rule was not followed by prosecution in relation to other important witnesses.
426. Thus, entire evidence relating to filing of applications for 21 UAS licences has been examined and analyzed in great detail as referred to above. These witnesses include witnesses who deposed about the transfer of Loop Telecom Limited to Sh. I. P. Khaitan and Ms. Kiran Khaitan. These witnesses also include witnesses who took the decision to file applications for 21 UAS licences on behalf of Loop Telecom Limited. These witnesses also include who signed the documents and actually filed the applications. These witnesses also include the chartered accountant and the company secretary, who certified the documents. However, none of these witnesses blamed any of the accused. None of these witnesses also admitted that the applications were suffering from any deficiency including in relation to Clause 8. The prosecution thus miserably failed to prove that these applications suffered from any deficiency including noncompliance to clause 8. The prosecution miserably failed to prove that any of the accused was responsible for any of the deficiency in the applications, if CBI Vs. Ravi Kant Ruia and others Page 480 of 526 there was any, and also for filing of the applications. The prosecution case can fail on this ground alone.
Version of Loop Telecom Limited
427. When complaint was received by DoT that Loop Telecom Limited had obtained licences in violation of Clause 8 of UASL Guidelines dated 14.12.2005, company suo motu explained its position to the DoT. This was done by its Chief Regulatory Officer Sh. Harish Kapoor, who was examined as PW
45. Let me take note of his evidence.
PW 45 Sh. Harish Kapoor, Chief Regulatory Officer of Loop Telecom Limited, deposed that he had clarified the equity structure of the company to the DoT vide his letter dated 04.05.2009, Ex PW 45/B (D148). The relevant parts of his letter read as under:
"................................................................................. .................................................................................. At the outset, we would like to categorically affirm that LTPL is in full compliance with the requirements under the UAS Licences including the substantial equity clause. Neither the Essar Group has substantial equity (10% or more) in LTPL nor does it control any of LTPL or any of its parent companies, BPL Communications Ltd. ("BPL Com") or Santa Trading Pvt. Ltd. ("STPL").
As of the date of application by LTPL for the UAS Licenses (the Relevant Date), the Essar Group held no direct equity interest in LTPL. It had an indirect equity interest in LTPL of less than 9.99% as permitted under Clause 8 of UASL guidelines. The remaining equity interest in LTPL was held by our promoters the Khaitan Group through their CBI Vs. Ravi Kant Ruia and others Page 481 of 526 investment / holding companies including STPL and BPL Com. The shareholding structure as of the Relevant Date, duly certified by the then statutory auditors of the company, is enclosed as EXHIBIT1. Since the Relevant date the indirect equity holding of Essar Group in LTPL has at no point exceeded 9.99%.
................................................................................... ................................................................................... As such we would like to clarify that there is no breach of Clause 8 of the UASL arising from STPL's ownership interest in LTPL as none of STPL, BPL Com, BPL Mobile or LTPL are associates of the Essar Group.
We, therefore, submit that there is no violation of UAS license and as such we continue to be eligible for the UAS licenses.
................................................................................... ................................................................................."
PW 45 Sh. Harish Kapoor deposed about this letter in his examinationinchief itself. The relevant part of his examinationinchief dated 04.02.2013, pages 3 to 5, reads as under:
".......There was a news item sometime in March or April 2009 about the equity structure of Loop Telecom (P) Limited and then I came to know about an inquiry in this regard. I have been shown a letter dated 04.05.2009 (D148), which was written by me to DoT. It bears my signature at point A and is now Ex PW 45/B, pages 203 to 205. It also has its annexures at pages 206 to 208. The annexures are already Ex PW 15/DH5, DH6 and DH7. These three annexures also bear my signature at point B on each page with seal of the company. The letter Ex PW 45/B was written by me to the DoT, pursuant to the news item about the equity structure of Loop CBI Vs. Ravi Kant Ruia and others Page 482 of 526 Telecom (P) Limited, clarifying the position of the company to the DoT in this regard. I had visited the DoT personally also to clarify this position, subsequent to the writing of this letter. Sh. A. K. Srivastava of AS Division of DoT had called me for personally clarifying this issue. As far as I remember I was alone when I visited the DoT in this regard. I visited the DoT two three times in this regard. However, the DoT officials told me that some officials of Essar group should also be called to DoT for clarifying Essar's position. Accordingly, I took Sh. Vikash Saraf of Essar group along to clarify the position. I can identify Sh. Vikash Saraf, if shown to me. He is present in Court and I identify him. At that time, both of us met Sh. A. K. Srivastava DDG (AS) and clarified our respective positions. After discussing the matter with Sh. A. K. Srivastava, he took both of us to Member (finance). There also, both of us explained our respective shareholding. Sh. A. K. Srivastava also explained some points to Member (Finance). After meeting Member (Finance), Vikash Saraf and myself also went to Sh. Santok Singh, legal advisor. However, he was not available. I took Sh. Vikash Saraf along as I was not able to explain the Essar shareholding structure, in Loop Telecom (P) Limited. The equity structure of Essar group in Loop Telecom (P) Limited. The explanation was to be given about the details of shareholders of the Essar company holding the equity stake in Loop Telecom (P) Limited......."
In his crossexamination, page 8, he deposed that DoT was satisfied with the explanation and the cross examination reads as under:
".......On our explaining the position, there was nothing more required to be done as DoT was satisfied with our compliance to clause 8. Thereafter, there was no query from the DoT in this regard. The DoT did not issue any show cause notice to Loop CBI Vs. Ravi Kant Ruia and others Page 483 of 526 Telecom (P) Limited regarding violation of substantial equity clause......."
In his further crossexamination, page 9, he deposed about his working with TTSL, showing that he is a man of experience in telecom field. The relevant part of the cross examination reads as under:
".......It is correct that when I was with Tatas, DoT was holding an inquiry into alleged violation by Tata group of substantial equity clause on the allegations that it held more than 10% equity both in Idea Cellular Limited and TTSL. Tata group had provided an explanation in this regard and I am aware about that explanation and it can be found out from the DoT files."
In his further crossexamination, pages 9 and 10, he reaffirmed that he was working on the instructions of I. P. Khaitan, and deposed as under:
"It is correct that during my tenure with Loop Telecom (P) Limited, I took instructions from I. P. Khaitan, Sandeep Basu, Ajay Madan and at times from Nalin Khaitan. Nalin Khaitan is son of I. P. Khaitan. Nalin Khaitan alongwith his father I. P. Khaitan was looking after the entire business of Loop Telecom (P) Limited. It is also correct that I participated, alongwith other senior management, in the meetings convened by I. P. Khaitan to review the performance of LTL. In some of these meetings, Nalin Khaitan was also present. Vikash Saraf was never present in any such meeting. I did not receive any instructions from Vikash Saraf in connection with affairs of Loop Telecom (P) Limited. Being in a senior position I know that I. P. Khaitan is the ultimate owner and promoter of Loop Telecom (P) Limited."CBI Vs. Ravi Kant Ruia and others Page 484 of 526
In his examinationinchief itself, the witness deposed that before joining Loop Telecom Limited as Chief Regulatory Officer, he had also worked with TTSL and Bharti Televentures Limited. This shows that he has sufficient experience about telecom matters including policy and procedures relating thereto. He deposed in his examinationin chief itself that he wrote letter, Ex PW 45/B, to DoT justifying the equity structure of Loop Telecom Limited. In his cross examination, he deposed that he was working as per the instruction of Sh. I. P. Khaitan and when he explained the equity structure to DoT, it was satisfied. However, the prosecution did not challenge this version either by reexamination or by cross examination and the prosecution is now bound by his evidence, and the evidence is to the effect that there was no violation of Clause 8.
PW 47 is Sh. Anil Khubchandani, GM (Legal) of Loop Telecom Limited. He had handed over documents to the investigating officer. In his crossexamination, he only identified and exhibited those documents. Prosecution did not put any question on facts to him. However, in his crossexamination dated 11.02.2013, page 6, he deposed about LTL being run by I. P. Khaitan as under:
"It is correct that I was interviewed by Shri Sandip Basu for the post of G.M. (Legal). It is correct that during my interview, Shri Sandip Basu had informed me that Shri I.P. Khaitan, through his group companies, was the ultimate owner of Loop Telecom Pvt. Ltd. It is correct that during my tenure with CBI Vs. Ravi Kant Ruia and others Page 485 of 526 Loop Telecom Pvt. Ltd., I took instructions from Shri I.P. Khaitan, Shri Sandip Basu and Shri Nalin Khaitan. Shri Nalin Khaitan is son of Shri I.P. Khaitan. During my tenure with this company, it was in my knowledge that Shri Nalin Khaitan and Shri I.P. Khaitan were looking after the affairs of Loop Group......."
Thus, the entire evidence is to the effect that Loop group of companies was being run by Sh. I. P. Khaitan and applications for 21 UAS licences were also filed at his instance. There is thus absolutely no evidence on record that these applications were filed at the instance of Essar group. Accordingly, on this point, prosecution case is without merit.
E. Selective Use of Official Notes: Cheating of Government
428. In the instant case, Loop Telecom Limited filed 21 applications dated 03.09.2007 for UAS licences in 21 service areas. The applications were processed and on finding the same to be in order, LOIs were issued to the company on 10.01.2008. Licence agreements, Ex PW 53/F1 to F21 (D187 to 207), were signed by DoT with Loop Telecom Limited on 29.02.2008.
The case of the prosecution is that Loop Telecom Limited was not compliant to Clause 8 of UAS Guidelines dated 14.12.2005. It is the case of the prosecution that despite not being compliant to these guidelines, the accused deliberately misled the DoT into believing that the company was compliant to Clause 8 and persuaded it to grant 21 UAS licences and also to sign licence agreements. It is the case of the prosecution that CBI Vs. Ravi Kant Ruia and others Page 486 of 526 in this manner, the accused cheated the government into signing the licence agreements. Prosecution case is found in examinationinchief of chief investigating officer PW 94 Sh. Vivek Priyadarshi, who in his examinationinchief dated 16.12.2013, page 19, deposed as under:
".......During investigation of RC No. DAI2009 A 0045, I came across allegations that Essar group had, under a corporate veil, controlled Loop Telecom Limited for which it caused to make applications for UAS licences in 21 service areas during September 2007 in violation of UASL Guidelines by suppressing vital information in this regard from DoT, in pursuance to which it got licences for 21 service areas and spectrum for 20 service areas, thereby, cheated the Government of India......"
429. Now the question is: Who is competent to say that government/ DoT was cheated by the accused? Can any official of a Government department be made, by an investigating agency, to say that the department has been cheated? Whether any authorization is needed from anyone to say so? Whether it depends upon the whims of an investigating agency?
Government is an abstract and continuous body. It always remains in existence. It acts and speaks through officers and employees manning it. These persons must be authorized to act on behalf of the Government. In a Court of law, Government is also treated like any private individual. For any harm caused to the interest of Government, only an authorized officer must speak about it. There cannot be any pick and choose.
430. A Minister is political head of a government CBI Vs. Ravi Kant Ruia and others Page 487 of 526 department. Secretary to Government of India is the administrative head of a department. He is also the principal adviser to the Minister on all matters of policy and administration. His responsibility is complete and undivided. In case of need, a Special Secretary is also appointed. He is responsible in respect of business falling within area of his responsibility subject to general supervision of the Secretary. Same is the position of a Joint Secretary. Thus, business of the government is transacted through officials designated for the purpose.
431. Let me take note of the Constitutional provisions as to how Government functions in our country.
432. Article 52 provides that there shall be a President of India and the Article reads as under:
"The President of India.- There shall be a President of India."
433. Article 53 provides as to how executive powers of the Union shall be exercised and reads as under:
"Executive power of the Union.- (1) The executive power of the Union shall be vested in the President and shall be exercised by him either directly or through officers subordinate to him in accordance with this Constitution.
(2) Without prejudice to the generality of the foregoing provision, the supreme command of the Defence Forces of the Union shall be vested in the President and the exercise thereof shall be regulated by law.
(3) Nothing in this article shall-
(a) be deemed to transfer to the President any functions conferred by any existing law on the CBI Vs. Ravi Kant Ruia and others Page 488 of 526 Government of any State or other authority; or
(b) prevent Parliament from conferring by law functions on authorities other than the President."
Thus, executive powers of the Union shall be exercised by the President through officers subordinate to him.
434. Article 74(1) provides for a council of Ministers with Prime Minister at the head and reads as under:
"Council of Ministers to aid and advise President.- [(1) There shall be a Council of Ministers with the Prime Minister at the head to aid and advise the President who shall, in the exercise of his functions, act in accordance with such advice:] [Provided that the President may require the Council of Ministers to reconsider such advice, either generally or otherwise, and the President shall act in accordance with the advice tendered after such reconsideration.]"
Thus, this Article provides for a Council of Ministers.
435. Article 77 provides as to how the business of the Government shall be conducted and reads as under:
"Conduct of business of the Government of India.- (1) All executive action of the Government of India shall be expressed to be taken in the name of the President.
(2) Orders and other instruments made and executed in the name of the President shall be authenticated in such manner as may be specified in rules to be made by the President, and the validity of an order or instrument which is so authenticated shall not be called in question on the ground that it is not an order or instrument made or executed by the President.
(3) The President shall make rules for the more convenient transaction of the business of the Government of India, and for the allocation among CBI Vs. Ravi Kant Ruia and others Page 489 of 526 Ministers of the said business."
In exercise of powers under Article 77, President has issued Transaction of Business Rules 1961 and Allocation of Business Rules 1961. These Rules provide as to how business is to be allocated to a Minister and how the business shall be transacted in a department under the supervision of a Minister.
436. Article 299 provides as to how contracts/ agreements shall be signed by the Government of India and lays down as under:
"299. Contracts. (1) All contracts made in the exercise of the executive power of the Union or of a State shall be expressed to be made by the President, or by the Governor of the State, as the case may be, and all such contracts and all assurances of property made in the exercise of that power shall be executed on behalf of the President or the Governor by such persons and in such manner as he may direct or authorise.
(2) Neither the President nor the Governor shall be personally liable in respect of any contract or assurance made or executed for the purposes of this Constitution, or for the purposes of any enactment relating to the Government of India heretofore in force, nor shall any person making or executing any such contract or assurance on behalf of any of them be personally liable in respect thereof."
Thus, a government contract:
(a) must be expressed to be made by the President or the Governor, as the case may be; and
(b) it shall be executed by a competent person in the prescribed manner.
437. It may be noted that a licence granted under Section CBI Vs. Ravi Kant Ruia and others Page 490 of 526 4 of Indian Telegraph Act is a contract between a licensee and the Government. In an authority reported as Bharti Airtel Limited Vs. Union of India, (2015) 12 SCC 1, Hon'ble Supreme Court observed in paragraph 4 as under:
"At the outset, we agree with the licensees that a licence granted under Section 4 of the Act is a contract between Government of India and the licensees."
438. I may also take note of Manual of Office Procedure issued by Ministry of Personnel, Public Grievances and Pensions, Department of Administrative Reforms & PG. It mentions various type of officers, who shall man the Government and also as to how they shall discharge their functions. Relevant provisions of the Manual read as under:
"
CHAPTER III MACHINERY OF GOVERNMENT
2. The President - The executive power of the Union formally vests in the President and may be exercised by him either directly or through officers subordinate to him, in accordance with the Constitution.
3. The Council of Ministers (1) In the exercise of his functions, the President is aided and advised by a Council of Ministers headed by the Prime Minister. In actual practice the executive power of the Union resides in the Council of Ministers.
(2) The Council of Ministers consists of three categories of Ministers, namely:
(a) Cabinet Ministers;
(b) Ministers of State; and CBI Vs. Ravi Kant Ruia and others Page 491 of 526
(c) Deputy Ministers.
(3) The Cabinet, which consists of Ministers of the first category only, is responsible for shaping the overall policies of the Government in discharging its responsibilities. It sometimes functions through its Committees.
4. Transaction of government business (1) Among the rules issued by the President for the convenient transaction of the business of the Government, under Article 77(3) of the Constitution, are:
(a) The Government of India (Allocation of Business) Rules; and
(b) The Government of India (Transaction of Business) Rules.
(2) The Allocation of Business Rules allocate the business of the government among its different departments which are assigned to the charge of the Ministers by the President on the advice of the Prime Minister. In relation to the business allotted to a Minister, these rules also permit the association of another Minister or Deputy Minister to perform such functions as may be specifically assigned to him.
(3) The Transaction of Business Rules seek to define the authority, responsibility and obligations of each department in the matter of disposal of business allotted to it. While providing that the business allotted to a department will be disposed of by, or under the direction of, the Ministerincharge, these rules also specify:
(a) cases or classes of cases to be submitted to the President, the Prime Minister, the Cabinet or its committees for prior approval; and
(b) the circumstances in which the department primarily concerned with the business under disposal will have to consult other departments concerned and secure their CBI Vs. Ravi Kant Ruia and others Page 492 of 526 concurrence before taking final decisions.
5. Department (1) A department is responsible for formulation of policies of the government in relation to business allocated to it and also for the execution and review of those policies.
(2) For the efficient disposal of business allotted to it, a department is divided into wings, divisions, branches and sections.
(3) A department is normally headed by a secretary to the Government of India who acts as the administrative head of the department and principal adviser of the Minister on all matters of policy and administration within the department.
(4) The work in a department is normally divided into wings with a Special Secretary/ Additional Secretary/ Joint Secretary in charge of each wing. Such a functionary is normally vested with the maximum measure of independent functioning and responsibility in respect of the business falling within his wing subject, to the overall responsibility of the Secretary for the administration of the department as a whole.
(5) A wing normally comprises a number of divisions each functioning under the charge of an officer of the level of Director/Joint Director/Deputy Secretary. A division may have several branches each under the charge of an Under Secretary or equivalent officer.
(6) A section is generally the lowest organisational unit in a department with a well defined area of work. It normally consists of assistants and clerks supervised by a Section Officer. Initial handling of cases (including noting and drafting) is generally done by, assistants and clerks who are also known as the dealing hands.
(7) While the above represents the commonly adopted pattern of organisation of a department, there are certain variations, the most CBI Vs. Ravi Kant Ruia and others Page 493 of 526 notable among them being the desk officer system. In this system the work of a department at the lowest level is organised into distinct functional desks each manned by two desk functionaries of appropriate ranks e.g. Under Secretary or Section Officer. Each desk functionary handles the cases himself and is provided adequate stenographic and clerical assistance.
(8) The other notable variation is the Integrated Headquarters of Ministry of Defence where, the Vice Chiefs of Staff, the Principal Staff Officers of the concerned branches and other appropriate authorities, exercise the powers delegated by the Raksha Mantri through the various Branches and the Directorates of the Integrated Headquarters of the Ministry of Defence.
(9) Functions of various levels of functionaries :
(a) Secretary - A Secretary to the Government of India is the administrative head of the Ministry or Department. He is the principal advisor of the Minister on all matters of policy and administration within his Ministry/Department, and his responsibility is complete and undivided.
(b) Special Secretary/ Additional Secretary/ Joint Secretary - When the volume of work in a Ministry exceeds the manageable charge of a Secretary one or more wings may be established with Special Secretary/ Additional Secretary/ Joint Secretary, incharge of each wing. Such a functionary is entrusted with the maximum measure of independent functioning and responsibility in respect of all business falling within his wing subject, to the general responsibility of the Secretary for the administration of the wing as a whole.
(c) Director / Deputy Secretary Director / Deputy Secretary is an officer who acts on behalf of the Secretary. He holds charge of a Secretariat Division and is responsible for the disposal of Government business dealt within the Division CBI Vs. Ravi Kant Ruia and others Page 494 of 526 under his charge. He should, ordinarily be able to dispose of the majority of cases coming upto him on his own. He should use his discretion in taking orders of the Joint Secretary/ Secretary on more important cases, either orally or by submission of papers.
(d) Under Secretary An Under Secretary is in charge of the Branch in a Ministry consisting of two or more Sections and in respect thereto exercises control both in regard to the despatch or business and maintenance of discipline. Work comes to him from the sections under his charge. As Branch Officer he disposes of as many cases as possible at his own level but he takes the orders of Deputy Secretary or higher officers on important cases.
(e) Section Officer A. General Duties
(i) Distribution of work among the staff as evenly as possible;
(ii) Training, helping and advising the staff;
(iii) Management and coordination of the work;
(iv) Maintenance of order and discipline in the section;
(v) Maintenance of a list of residential addresses of the Staff."
439. Bare perusal of these provisions makes it clear that Government functions through various officers. Executive power of the Government may be exercised by the President through officers subordinate to him. A Minister is also an officer subordinate to the President. Signing of licence agreement is a facet of executive power of the Government.
440. It may be noted that DoT is divided into various cells CBI Vs. Ravi Kant Ruia and others Page 495 of 526 like AS cell, IP cell, Legal cell etc., each headed by a Joint Secretary level officer known as DDG. It may also be noted that AS cell is the licensing cell of the DoT, responsible for telecom licences. It is headed by DDG (AS). At the relevant time, PW 88 Sh. A. K. Srivastava was DDG (AS) heading the AS cell. It may also be noted that Sh. Chandra Prakash, Member (T) of Telecom Commission and an officer of rank of exofficio Secretary to the Government of India, was the final authority in AS cell, subject to overall supervision of Secretary (T).
441. In an authority reported as Rai Saheb Ram Jawaya Kapoor and others Vs. State of Punjab, AIR 1955 SC 549, Hon'ble Supreme Court while dealing with the extent of executive power of the Union Government observed in para 13 as under:
"The limits within which the executive Government can function under the Indian Constitution can be ascertained without much difficulty by reference to the form of the executive which our Constitution has set up. Our Constitution, through federal in its structure, is modelled on the British parliamentary system where the executive is deemed to have the primary responsibility for the formulation of governmental policy and its transmission into law though the condition precedent to the exercise of this responsibility is its retaining the confidence of the legislative branch of the State. The executive function comprises both the determination of the policy as well as carrying it into execution. This evidently includes the initiation of legislation, the maintenance of order, the promotion of social and economic welfare, the direction of foreign policy, in fact the carrying on or supervision of the general administration of the State."CBI Vs. Ravi Kant Ruia and others Page 496 of 526
From this authority it is clear that maintenance of order is an executive function. In my humble opinion, maintenance of order includes prevention, detection, investigation and prosecution of crime. This has to be done as per the hierarchy of officials provided by law or rules. In the hierarchical system of the Government, the view of the competent authority must prevail otherwise there would be utter chaos.
442. As per Section 4 of the Indian Telegraph Act 1985, Government may grant a telecom licence to a private entity and for that it may sign a licence agreement.
Thus, it is clear that a licence agreement is to be signed by an officer on behalf of President authorized by the competent authority. In the instant case, licence agreements were signed by Sh. R. K. Gupta on behalf of President of India as authorized by the Minister, the competent authority.
443. It is the case of the prosecution that applications filed by Loop Telecom Limited for issue of 21 UAS licences were processed in file D165 and the LOIs were issued to the company on 10.01.2008. It is the case of the prosecution that on compliance of LOIs, licence agreements, Ex PW 53/F1 to F21, were signed with the company as per authorization in file D166. It is the case of the prosecution that during the process of signing of licence agreements itself, a complaint was received from Janhit Morcha alleging that the company was in violation of clause 8. It is the case of the prosecution that this complaint CBI Vs. Ravi Kant Ruia and others Page 497 of 526 was processed in file D148 and was referred to MCA vide letter dated 05.08.2008, Ex PW 74/A4. It is the case of the prosecution that MCA sent a reply vide letter dated 13.04.2009, Ex PW 70/A22, page 360 (D148). It is the case of the prosecution that on getting the reply from MCA, the same was processed in file D148 by various officers and vide note dated 17.06.2009, Ex PW 70/A2, recorded by Sh. A. K. Singh, ADG (ASI), company was found to be in violation of clause 8 and he recommended issue of show cause notice and the same was also agreed to by various officers including Sh. Manish Sinha, DDG (LF). However, no show cause notice was issued as the same was not approved by the then Minister. It is also the case of the prosecution that the complaint of Janhit Morcha was also examined by MCA in file D149. It is the case of the prosecution that in this file, Sh. R. K. Meena, Deputy Director, and Sh. Jitesh Khosla recorded their notes to the effect that the company was in violation of clause 8. It is the case of the prosecution that if the notings recorded by various officers are read, it is clear that the company was in violation of clause 8.
444. On the other hand, defence argued that there was no violation of clause 8 by the company. It is the case of the defence that isolated notes recorded by different officers cannot be used to allege that the company was in violation of clause 8. It is the case of the defence that opinion of Legal Advisor was also obtained and he gave his categorical opinion dated 05.05.2009, Ex PW 70/A25, to the effect that there was no violation of clause 8 by the company and the competent CBI Vs. Ravi Kant Ruia and others Page 498 of 526 authority agreed with it. It is the case of the defence that when competent authority did not approve even the issue of show cause notice to the company, how can subordinate officers say that company violated Clause 8. It is the case of the defence that only the opinion of the competent authority matters and not the opinion recorded in isolated notes. It is the case of the defence that such notes cannot be used to allege that the DoT was cheated by the accused into believing that Loop Telecom Limited was compliant to clause 8.
It may be noted that all important notes on which the case of the prosecution depends have already been taken note of.
445. Let me take note of the law on point as to how Government functions in practice and what is the legal standing of notes recorded by different officers while dealing with an issue.
In an authority reported as Bachhittar Singh Vs. State of Punjab and Another, AIR 1963 SC 395, Hon'ble Supreme Court while dealing with an issue relating to transaction of business of the government observed in paragraph 10 as under:
"The business of State is a complicated one and has necessarily to be conducted through the agency of a large number of officials and authorities. The Constitution, therefore, requires and so did the Rules of Business framed by the Rajpramukh of PEPSU provide, that the action must be taken by the authority concerned in the name of the Rajpramukh. It is not till this formality is observed that the action can be regarded as that of the State or here, by the CBI Vs. Ravi Kant Ruia and others Page 499 of 526 Rajpramukh......."
Thus, it is clear that the business of State has to be conducted through the agency of large number of officials and authorities.
In an another authority reported as Jasbir Singh Chhabra and Others Vs. State of Punjab and Others, (2010) 4 SCC 192, the Hon'ble Supreme Court, while dealing with a question of change of land use from industrial to residential and working of the government in relation to this, observed in paragraph 35 as to how government works and the same reads as under:
"It must always be remembered that in a democratic polity like ours, the functions of the Government are carried out by different individuals at different levels. The issues and policy matters which are required to be decided by the Government are dealt with by several functionaries some of whom may record notings on the files favouring a particular person or group of persons. Someone may suggest a particular line of action, which may not be conducive to public interest and others may suggest adoption of a different mode in larger public interest. However, the final decision is required to be taken by the designated authority keeping in view the large public interest. The notings recorded in the files cannot be made basis for recording a finding that the ultimate decision taken by the Government is tainted by mala fides or is influenced by extraneous considerations. The Court is duty bound to carefully take note of the same........"
From this authority, it is clear that in Government final decision is required to be taken by competent authority in CBI Vs. Ravi Kant Ruia and others Page 500 of 526 large public interest. The notes recorded by various officers during the processing of an issue cannot be used to taint the final decision with mala fides.
Similarly, in an authority reported as Mangal Amusement Park (P) Ltd. & Anr. Vs. State of Madhya Pradesh & Others, 2012 IX AD (SC) 98, while dealing with a similar issue, Hon'ble Supreme Court in paragraph 23 observed as under:
".......One has to recognise that where different authorities are dealing with a particular subject, it is quite possible that on some occasions, they may take a stand different from each other, though ultimately it is the decision of the competent authority which matters......"
It is clear from this authority that different officers take different stands from each other during processing of an issue. However, ultimately the decision of competent authority prevails.
The aforesaid view has been reiterated by the Hon'ble Supreme Court in a recent authority reported as Vivek Batra Vs. UOI, AIR 2016 SC 4770, wherein Hon'ble Supreme Court observed in paragraphs 7 to 10 as under:
"7. There is no dispute that for an IRS officer Cadre Controlling Authority is the Finance Minister of the Government of India. In Bachhittar Singh v. The State of Punjab, Constitution Bench of this Court has held that the business of the State is a complicated one and has necessarily to be conducted through the agency of large number of officials and authorities.
8. In Jasbir Singh Chhabra and others v. State of CBI Vs. Ravi Kant Ruia and others Page 501 of 526 Punjab and others, this Court held as under "35. It must always be remembered that in a democratic polity like ours, the functions of the Government are carried out by different individuals at different levels. The issues and policy matters which are required to be decided by the Government are dealt with by several functionaries some of whom may record notings on the files favouring a particular person or group of persons. Someone may suggest a particular line of action, which may not be conducive to public interest and others may suggest adoption of a different mode in larger public interest. However, the final decision is required to be taken by the designated authority keeping in view the large public interest. The notings recorded in the files cannot be made basis for recording a finding that the ultimate decision taken by the Government is tainted by mala fides or is influenced by extraneous considerations........"
9. In Sethi Auto Service Station and another v. Delhi Development Authority and others, this Court observed as under:
"14. It is trite to state that notings in a departmental file do not have the sanction of law to be an effective order. A noting by an officer is an expression of his viewpoint on the subject. It is no more than an opinion by an officer for internal use and consideration of the other officials of the department and for the benefit of the final decision making authority. Needless to add that internal notings are not meant for outside exposure. Notings in the file culminate into an executable order, affecting the rights of the parties, only when it reaches the final decisionmaking authority in the department, gets his approval and the final order is communicated to the person concerned."
10. In view of the law laid down by this Court, as above, we are of the opinion that the sanction cannot be held invalid only for the reason that in the administrative notings different authorities have CBI Vs. Ravi Kant Ruia and others Page 502 of 526 opined differently before the competent authority took the decision in the matter. It is not a case where the Finance Minister was not the competent authority to grant the sanction........"
Thus, final decision relating to Government business is to be taken by competent authority. It is also clear that Minister is also an officer subordinate to the President, though he is political head of the department. Secretary is the administrative head of the department. A Special Secretary/ Ex officio Secretary works with maximum independence subject to general responsibility of the Secretary for the administration as a whole.
446. In the instant case, Member (T) Sh. Chander Prakash, an officer of the rank of Special Secretary to the Government of India, vide his note dated 24.09.2009, Ex PW 66/A, opined that department may agree with legal advice. As noted earlier, the legal advice was to the effect that there was no violation of clause 8 by Loop Telecom Limited. This was agreed to by the Secretary (T) Sh. Sidharath Behura vide his note dated 24.09.2009, Ex PW 74/A9. Sh. Sidharath Behura recorded that in view of legal advice DoT need not split hair and the matter may be closed. Secretary is the administrative head of the department and in the instant case he agreed with the opinion of LA (T) and Member (T). This was finally approved by Sh. A. Raja vide his note dated 06.04.2010, Ex PW 70/A17, in which he recorded that in view of comments of MCA and opinion of Legal Advisor, the observation of Secretary (T) be CBI Vs. Ravi Kant Ruia and others Page 503 of 526 accepted. He also recorded that if some new facts come to the knowledge of department in future regarding violation of clause 8, the issue may be reexamined. Thus, the competent authority finally closed the matter accepting the legal advice that there was no violation of clause 8.
447. It may be noted that neither Member (T) nor Secretary (T) nor Minister is an accused in the instant case. None of them has also been examined as a witness by the prosecution, though all three of them are available. Not only this, Sh. Chander Prakash was examined during investigation and his statement recorded under Section 161 CrPC is on record. Now the question is: Whether a matter which was closed by competent authority could be opened by using a subordinate officer? The next question is: Who is competent to say that the Government was cheated by the company? In the instant case, the legal opinion was to the effect that there was no violation of clause 8 and it was based on sound reasoning. This was accepted by the competent authority on the advice of Member (T) and Secretary (T).
Moreover, while recording his opinion dated 05.05.2009, Ex PW 70/A25, Legal Advisor (T) mentioned that DDG (ASI), that is, Sh. A. K. Srivastava, stated that financial arrangement of investment of Essar group in STPL and again by STPL through BPL Communications Limited in Essar group took place prior to the issue of LOIs and grant of licences and that these investments as nonconvertible debentures may be termed as intercorporate investment and they could not be considered CBI Vs. Ravi Kant Ruia and others Page 504 of 526 to form direct or indirect equity share capital of the company under the Companies Act. This is perfectly reasonable view. Two senior most officers of the department, that is, Member (T) and Secretary (T), agreed with this view and it was ultimately approved by the Minister, the competent authority. Prosecution has not led any evidence as to how the view of LA (T) was faulty and how the final order to close the order can be termed mala fide. When the Secretary of the department and the Minister say that there was no violation of clause 8, how can a junior officer is entitled to say that there was violation of Clause 8 without citing fresh material or good reasons. Material remains the same as was available to the DoT, MCA and the Legal Advisor. The prosecution case rests even today on the same material.
448. In this fact situation, the prosecution cannot use isolated notes recorded by DoT and MCA officers to allege that the company was in violation of clause 8 and, as such, cheated the DoT. As already noted above, isolated notes cannot be used to assail the final decision of the competent authority without citing good reasons. Accordingly, there is no merit in the submission of the prosecution that DoT was cheated by the accused persons. This ground alone is sufficient to discard the prosecution case.
449. It was also argued on behalf of the prosecution that in such cases where Government is alleged to have been cheated, CBI itself can register a case, investigate it and prosecute the offenders. In this regard, my attention was invited CBI Vs. Ravi Kant Ruia and others Page 505 of 526 to an authority reported as R. Venkatraman Vs. CBI, (2009) 1 SCC 737. On the basis of this authority, it was argued that even if there is no complaint from senior officers of DoT, CBI itself can register a case. There cannot be any dispute with this legal proposition. Only point is that once three senior most officers, in consultation with the LA(T), had observed that there was no violation of clause 8, then how can an investigating agency by making selective use of notes can make out a case without countering the observations of the officers, with some other evidence of good quality. In this case, there is no evidence that the opinion given by LA(T) and accepted by Member (T), Secretary (T) and the Minister, was accepted without any valid reason. In the instant case, these officers have not even been examined as witness.
450. In an authority reported as Mohd. Khalid Vs. State of W.B., (2002) 7 SCC 334, while dealing with the question of examination of witnesses by prosecution, Hon'ble Supreme Court observed in paragraphs 14 and 15 as under:
"14. Normally, the prosecution's duty is to examine all the eyewitnesses the selection of whom has to be made with due case, honestly and fairly. The witnesses have to be selected with a view not to suppress any honest opinion, and due care has to be taken that in selection of witnesses, no adverse inference is drawn against the prosecution. However, no general rule can be laid down that each and every witness has to be examined even though his testimony may or may not be material. The most important factor for the prosecution being that all those witnesses strengthening the case of the prosecution have to be examined, the prosecution CBI Vs. Ravi Kant Ruia and others Page 506 of 526 can pick and choose the witnesses who are considered to be relevant and material for the purpose of unfolding the case of the prosecution. It is not the quantity but the quality of the evidence that is important. In the case at hand, if the prosecution felt that its case has been well established through the witnesses examined, it cannot be said that nonexamination of some persons rendered its version vulnerable.
15. As was observed by this Court in Habeeb Mohd. State of Hyderabad the prosecution is not bound to call a witness about whom there is a reasonable ground for believing that he will not speak the truth."
451. In the instant case, LA (T) has been examined as a witness, but Member (T), Secretary (T) and the Minister were not examined. LA (T) has not supported the prosecution case. Thus, by nonexamining of Member (T), Secretary (T) and the Minister as witnesses, the prosecution tried to suppress an honest opinion. Now the question is: Who is the person aggrieved? In a case titled as M. Shobana Vs. The Assistant Director, Writ Petition No. 14083/2013 decided on 25.09.2013, Hon'ble Madras High Court observed in paragraph 52 as under:
"At this stage, this Court recalls and recollects the decision In Re Exp Sidebotham (1880) 14 Ch D 458 (which was relied upon decision 2001 Crl. J. 2853) wherein it is held as follows:
"But the words 'person aggrieved' do not really mean a man who is disappointed (deprived) of a benefit which he might have received if some other order had been made. A 'person CBI Vs. Ravi Kant Ruia and others Page 507 of 526 aggrieved' must be a man who has suffered a legal grievance, a man against whom a decision has been pronounced which has wrongly deprived him of something, or wrongfully refused him something or wrongfully affected his title to something."
Thus, there is no competent view on record that the DoT was really aggrieved. It is clear that prosecution suppressed an honest view to the effect that there was no violation of Clause 8 by the company. However, it picked up subordinate officers to make them say that there was violation of clause 8. This is in violation of law and procedure as there can be no selective use of notes and subordinate officers. In an authority reported as Govindaraju alias Govinda Vs. State, (2012) 4 SCC 722, Hon'ble Supreme Court, while dealing with such situation, observed in paragraph 66 as under:
"This Court in Takhaji Hiraji clearly stated that material witness is one who would unfold the genesis of the incident or an essential part of the prosecution case and by examining such witnesses the gaps or infirmities in the case of the prosecution could be supplied. If such a witness, without justification, is not examined, inference against the prosecution can be drawn by the court. The fact that the witnesses who were necessary to unfold the narrative of the incident and though not examined, but were cited by the prosecution, certainly raises a suspicion. When the principal witnesses of the prosecution become hostile, greater is the requirement of the prosecution to examine all other material witnesses who could depose in completing the chain by proven facts. This view was reiterated by this Court in Yakub Ismailbhai Patel v. State of Gujarat."CBI Vs. Ravi Kant Ruia and others Page 508 of 526
Thus, adverse inference can be drawn against the prosecution for not examining three senior officers of DoT without citing any good reason. In this situation, there is no version from any competent officer to the effect that DoT was cheated. This ground alone, by itself, is sufficient for discarding the prosecution case in its entirety.
F. Lifting the Corporate Veil
452. It is the case of the prosecution that in the instant case, there was a deep rooted conspiracy by the accused persons, which is difficult to unravel and understand. It is the case of the prosecution that in this case, Essar group, which was already having 33% equity in Vodafone Essar Limited, a pan India licensee, acquired licences in 21 service areas by using Loop Telecom Limited under the guise that it was owned by Sh. I. P. Khaitan and Ms. Kiran Khaitan. It is the case of the prosecution that for unraveling the entire conspiracy, corporate veil is required to be lifted.
On the other hand, the case of the defence is that facts of the case are crystal clear. It is the case of the defence that on the day Loop Telecom Limited applied for 21 UAS licences, it was owned by Sh. I. P. Khaitan and Ms. Kiran Khaitan. It is the case of the defence that BPL companies were acquired by Sh. I. P. Khaitan for being ultimately sold to HEL and one of the companies, that is, BPL Mobile Cellular Limited was sold also. It is the case of the defence that BPL Mobile CBI Vs. Ravi Kant Ruia and others Page 509 of 526 Communication Limited, which was holding UAS licence for Mumbai service area could not be sold as permission from DoT did not come within the agreed time. It is the case of the defence that BPL Communications Limited and BPL Mobile Communication Limited were companies of Sh. I. P. Khaitan. It is the case of the defence that STPL was also company of Sh. I. P. Khaitan. It is the case of the defence that STPL, the ultimate holding company, BPL Communications Limited and BPL Mobile Communication Limited and Loop Telecom Limited, the licensee company, were companies of Sh. I. P. Khaitan and Ms. Kiran Khaitan. It is the case of the defence that evidence is clear in this regard and there is no veil, which remains to be lifted.
Let me take note of the law on this point.
453. Dealing with the question of lifting the corporate veil, Hon'ble Supreme Court in an authority reported as Western Coalfields Limited Vs. Special Area Development Authority, Korba and Another, (1982) 1 SCC 125, observed in paragraph 23 as under:
".......In Pennington's Company Law , 4 th edn., pp.
5051, it is stated that there are only two decided cases where the court has disregarded the separate legal entity of a company and that was done because the company was formed or used to facilitate the evasion of legal obligations. The learned Author, after referring to English and American decisions, has summed up the position in the words of an American Judge, Sanborn, J. to the effect that as a general rule, a corporation will be looked upon as a legal entity and an exception can be made "when the notion of legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend CBI Vs. Ravi Kant Ruia and others Page 510 of 526 crime", in which case, "the law will regard the corporation as an association of persons". In cases such as those before us, there is no scope for applying the doctrine of lifting the veil in order to have regard to the realities of the situation......."
This authority clearly lays down that corporate veil can be lifted only when public convenience is being defeated or a wrong is being justified or fraud is sought to be protected or crime is being defended.
In an another authority reported as DDA Vs. Skipper Constructions Company (P) Limited and another, (1996) 4 SCC 622 , Hon'ble Supreme Court while dealing with the question of lifting the corporate veil, observed in paragraph 28 as under:
"The concept of corporate entity was evolved to encourage and promote trade and commerce but not to commit illegalities or to defraud people. Where, therefore, the corporate character is employed for the purpose of committing illegality or for defrauding others, the court would ignore the corporate character and will look at the reality behind the corporate veil so as to enable it to pass appropriate orders to do justice between the parties concerned. The fact that Tejwant Singh and members of his family have created several corporate bodies does not prevent this Court from treating all of them as one entity belonging to and controlled by Tejwant Singh and family if it is found that these corporate bodies are merely cloaks behind which lurks Tejwant Singh and/ or members of his family and that the device of incorporation was really a ploy adopted for committing illegalities and/ or to defraud people."CBI Vs. Ravi Kant Ruia and others Page 511 of 526
Thus, this authority lays down that corporate veil can be lifted if the device of incorporation was being used for committing illegalities or to defraud people.
Similarly, in an authority reported as Commissioner of Central Excise, New Dehi Vs. Modi Alkalies and Chemicals Limited, (2004) 7 SCC 569, Hon'ble Supreme Court observed in paragraph 8 as under:
"Whether there is interdependence and whether another unit is, in fact, a dummy has to be adjudicated on the facts of each case. There cannot be any generalisation or rule of universal application. Two basic features which prima facie show interdependence are pervasive financial control and management control........"
Thus, this authority lays down that whether one company is dummy for another is to be determined on the basis of evidence led on record by the parties.
Furthermore, in an authority reported as Balwant Rai Saluja Vs. Air India Limited, (2014) 9 SCC 407, Hon'ble Supreme Court observed in paragraphs 71 and 74 as under:
"71. In recent times, the law has been crystallised around the six principles formulated by Munby, J. in Ben Hashem v. Ali Shayif. The six principles, as found at paras 15964 of the case are as follows:
(i) Ownership and control of a company were not enough to justify piercing the corporate veil;
(ii) The court cannot pierce the corporate veil, even in the absence of third party interests in the company, merely because it is thought to be necessary in the interests of justice;
(iii) The corporate veil can be pierced only if CBI Vs. Ravi Kant Ruia and others Page 512 of 526 there is some impropriety;
(iv) The impropriety in question must be linked to the use of the company structure to avoid or conceal liability;
(v) To justify piercing the corporate veil, there must be both control of the company by the wrongdoer(s) and impropriety, that is use or misuse of the company by them as a device or facade to conceal their wrongdoing; and
(vi) The company may be a "facade" even though it was not originally incorporated with any deceptive intent, provided that it is being used for the purpose of deception at the time of the relevant transactions. The court would, however, pierce the corporate veil only so far as it was necessary in order to provide a remedy for the particular wrong which those controlling the company had done.
74. Thus, on relying upon the aforesaid decisions, the doctrine of piercing the veil allows the court to disregard the separate legal personality of a company and impose liability upon the persons exercising real control over the said company. However, this principle has been and should be applied in a restrictive manner, that is, only in scenarios wherein it is evident that the company was a mere camouflage or sham deliberately created by the persons exercising control over the said company for the purpose of avoiding liability. The intent of piercing the veil must be such that would seek to remedy a wrong done by the persons controlling the company. The applications would thus depend upon the peculiar facts and circumstances of each case."
This authority also lays down that corporate veil can be lifted only in case of impropriety by a company with a view to avoid legal liability. The authority lays down that the CBI Vs. Ravi Kant Ruia and others Page 513 of 526 principle of lifting the corporate veil should be applied in restrictive manner, as it is an exception to the principle that a company is a legal entity separate and distinct from its shareholders. This authority also lays down that corporate veil cannot be lifted merely because of ownership and control of a company or for the reason that it is in public interest. This authority also lays down that application of principle of lifting the corporate veil would depend upon facts and circumstances of each case.
In an another authority reported as Vodafone International Holdings BV Vs. Union of India and Another, (2012) 6 SCC 613, dealing with the concept of lifting the corporate veil, Hon'ble Supreme Court observed in paragraph 277 as under:
"Lifting the corporate veil doctrine is readily applied in the cases coming within the Company Law, Law of Contract, Law of Taxation. Once the transaction is shown to be fraudulent, sham, circuitous or a device designed to defeat the interest of the shareholders, investors, parties to the contract and also for tax evasion, the Court can always lift the corporate veil and examine the substance of the transaction."
This authority lays down that if a transaction is shown to be fraudulent or sham or circuitous, corporate veil can be lifted. How a transaction would be shown to be fraudulent, sham or circuitous? The answer is that a transaction would be shown to be fraudulent, sham or circuitous with the help of evidence alone.
454. Now the question is: Whether there is evidence to CBI Vs. Ravi Kant Ruia and others Page 514 of 526 show that the transactions in the instant case were circuitous aimed at defeating Clause 8 of Guidelines dated 14.12.2005?
In the instant case, entire evidence has been taken note of in great detail. The evidence already noted above is to the effect that BPL companies were purchased by Sh. I. P. Khaitan. Evidence is also on record to the effect that BPL Mobile Cellular Limited was sold by Sh. I. P. Khaitan to HEL, though its sale consideration were parked with Essar group. Evidence is also on record that BPL Mobile Communication Limited could not be sold to HEL as permission from DoT was not forthcoming in the agreed time, though its sale consideration was already paid and parked with Essar group. Evidence is also on record that decision to file applications for 21 UAS licences was taken at the instance of Sh. I. P. Khaitan. It is also on record that the applications were, in fact, filed at the instance of Sh. I. P. Khaitan. Entire evidence has been extracted, examined and analyzed in detail as referred to above. The weight of the oral evidence and to an extent documentary evidence is to the effect that Sh. I. P. Khaitan was behind all the activities relating to the purchase of BPL companies, their sale as well as filing of applications for 21 UAS licences. Most of the witnesses deposed that the documents were genuine one.
455. However, at the bar, the prosecution referred to many documents and facts mentioned therein to point out wrongdoing by the accused. However, during examination, the prosecution did not invite the attention of any witness to any specific fact mentioned in the documents and crucial to its case.
CBI Vs. Ravi Kant Ruia and others Page 515 of 526Most of the times, it was content with just getting the documents exhibited. However, at the bar it heavily relied upon these documents. When the attention of the witnesses was not drawn to the facts mentioned in these documents, these facts could not come in the deposition also. Consequently, questions about these facts also could not be put to the accused during their examination under Section 313 CrPC. Due to this, there is no explanation from the accused about the facts mentioned in many documents and relied upon by the prosecution. In such a situation, there is violation of principle of natural justice. Accordingly, the facts which were not put to the accused, cannot be used against the accused.
456. Thus, the weight of the evidence, both oral and documentary, is that Sh. I. P. Khaitan was the man behind the entire events alleged in the instant case. Evidence is on record to the effect that Sh. I. P. Khaitan owns his own group of companies known as "Khaitan group" and it is separate and independent from Essar group. When two groups are independent, there can be no violation of Clause 8. The witnesses examined by the prosecution itself deposed that BPL companies were acquired by Sh. I. P. Khaitan and it was Sh. I. P. Khaitan on whose instructions the applications for 21 UAS licences were filed. In these circumstances, there is no material on record to indicate that it was a sham or bogus transaction. Evidence referred to above is almost crystal clear and the same is against the prosecution.
457. When a document or a transaction is genuine, where CBI Vs. Ravi Kant Ruia and others Page 516 of 526 is the question of lifting the corporate veil. In Vodafone International Holding B.V. (Supra), Hon'ble Supreme Court in paragraph 63 observed as under:
The Westminister principle states that: (Ramsay case, AC p. 323 G) "Given that a document or transaction is genuine, the Court cannot go behind it to some supposed underlying substance"
The said principle has been reiterated in subsequent English course judgments as the cardinal principles.
In paragraph 79, it was further observed as under:
".......The revenue may invoke the "substance over form" or "piercing the corporate veil" test only after it is able to establish on the basis of facts and circumstances surrounding the transaction that the impugned transaction is sham......."
458. In the instant case, there is no evidence that Essar group was in control of Loop Telecom Limited except the fact that on the date of applications for UAS licences, that is, on 03.09.2008, it held nonconvertible debentures of STPL to the tune of Rs.1592 Crore. The witnesses have deposed that all the transactions were genuine one. Thus, there is no evidence on record that the transactions were not genuine or were sham or circuitous aimed at controlling of Loop Telecom Limited by Essar group. Accordingly, there is no question of lifting any corporate veil. It may be noted that corporate veil is a legal device and is not illegal by itself. It is acquired by a company on its incorporation. It can only be lifted when fraud is CBI Vs. Ravi Kant Ruia and others Page 517 of 526 committed by taking advantage of the corporate veil.
Thus, there is no merit in the submission of the prosecution that corporate veil is required to be lifted.
G. Cheating
459. It is the case of the prosecution that the accused in conspiracy with each other cheated DoT into issuing 21 UAS licences to Loop Telecom Limited despite knowing the fact that the company was ineligible as it was substantially controlled by Essar group, which was already having substantial stake in an existing pan India licensee, that is, Vodafone Essar. It is the case of the prosecution that by filing false certificate of compliance to Clause 8, the accused persuaded the DoT to believe the same to be correct and to issue the licences. It is the case of the prosecution that Sh. Vikash Saraf was involved in misleading DoT.
On the other hand, the defence has argued that there is absolutely no evidence of cheating on the record of this case. It is the case of the defence that there is no evidence on record to show as to who made the false representation and what was the representation. It is the case of the defence that none of the accused made any representation to the DoT what to talk of a false representation.
Both parties have invited my attention to the evidence on record, legal provision and case law.
460. Section 415 IPC defines "Cheating" as under:
"Cheating.- Whoever, by deceiving any person, fraudulently or dishonestly induces the person so CBI Vs. Ravi Kant Ruia and others Page 518 of 526 deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to "cheat"."
461. Section 420 IPC provides as under:
"Cheating and dishonestly inducing delivery of property.- Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine."
462. In an authority reported as V. Y. Jose and Another Vs. State of Gujarat and Another, (2009) 3 SCC 78, Hon'ble Supreme Court while dealing with the question of cheating observed in paragraphs 14 and 25 as under:
"14. An offence of cheating cannot be said to have been made out unless the following ingredients are satisfied:
(i) deception of a person either by making a false or misleading representation or by other action or omission;
(ii) fraudulently or dishonestly inducing any person to deliver any property; or to consent that any person shall retain any property and finally intentionally inducing that person to do or omit to do anything which he would not do or omit.
For the purpose of constituting an offence of cheating, the complainant is required to show that CBI Vs. Ravi Kant Ruia and others Page 519 of 526 the accused had fraudulent or dishonest intention at the time of making promise or representation. Even in a case where allegations are made in regard to failure on the part of the accused to keep his promise, in the absence of a culpable intention at the time of making initial promise being absent, no offence under Section 420 of the Penal Code can be said to have been made out.
"25. In Hira Lal Hari Lal Bhagwati v. CBI this Court held: (SCC p. 280, para 40) "40. It is settled law, by a catena of decisions, that for establishing the offence of cheating, the complainant is required to show that the accused had fraudulent or dishonest intention at the time of making promise or representation. From his making failure to keep promise subsequently, such a culpable intention right at the beginning, that is, at the time when the promise was made cannot be presumed. It is seen from the records that the exemption certificate contained necessary conditions which were required to be complied with after importation of the machine. Since the GCS could not comply with it, therefore, it rightly paid the necessary duties without taking advantage of the exemption certificate. The conduct of the GCS clearly indicates that there was no fraudulent or dishonest intention of either the GCS or the appellants in their capacities as officebearers right at the time of making application for exemption. As there was absence of dishonest and fraudulent intention, the question of committing offence under Section 420 of the Penal Code does not arise. We have read the chargesheet as a whole. There is no allegation in the first information report or the chargesheet indicating expressly or impliedly any intentional deception or fraudulent/dishonest intention on the part of the appellants right from the time of making the promise or misrepresentation. Nothing has been CBI Vs. Ravi Kant Ruia and others Page 520 of 526 said on what those misrepresentations were and how the Ministry of Health was duped and what were the roles played by the appellants in the alleged offence. The appellants, in our view, could not be attributed and mens rea of evasion of customs duty or cheating the Government of India as the Cancer Society is a nonprofit organisation and, therefore, the allegations against the appellants levelled by the prosecution are unsustainable. The Kar Vivad Samadhan Scheme certificate along with Duncans and Sushila Rani judgments clearly absolve the appellants herein from all charges and allegations under any other law once the duty so demanded has been paid and the alleged offence has been compounded. It is also settled law that once a civil case has been compromised and the alleged offence has been compounded, to continue the criminal proceedings thereafter would be an abuse of the judicial process."
Similarly, in another authority reported as International Advanced Research Centre for Powder Metallurgy and New Materials (ARCI) and Others Vs. Nimra Cerglass Technics Private Limited and Another, (2016) 1 SCC 348, Hon'ble Supreme Court observed about the ingredients of offence of cheating in paragraph 15 as under:
"The essential ingredients to attract Section 420 IPC are: (i) cheating; (ii) dishonest inducement to deliver property or to make, alter or destroy any valuable security or anything which is sealed or signed or is capable of being converted into a valuable security; and (iii) mens rea of the accused at the time of making the inducement. The making of a false representation is one of the essential ingredients to constitute the offence of cheating under Section 420 IPC. In order to bring a case for the offence of cheating, it is not merely sufficient to CBI Vs. Ravi Kant Ruia and others Page 521 of 526 prove that a false representation had been made, but it is further necessary to prove that the representation was false to the knowledge of the accused and was made in order to deceive the complainant."
It is also interesting to take note of one authority reported as Hema Vs. State of Madras, AIR 2013 SC 1000 wherein there were allegations of conspiracy to obtain fake passport. The application for passport was alleged to has been filed by an employee on behalf of employer. Dealing with proof of such a case of conspiracy to cheat and actual cheating, Hon'ble Supreme Court observed in paragraph 24 as under:
"Finally, the contention of the appellant that simply because the applications were filled up by a person does not automatically lead to the inference that a person is a party to the conspiracy. In the case on hand, it is very well established by the prosecution that the filled up passport applications were submitted by A5 (appellant herein) on behalf of her employer A3. Further, in majority of passport applications (Exhs. P2 to P43), bogus particulars were filled by A5 (appellant herein), at Trichy. The prosecution has also established that A5 has given false particulars regarding the place of residence of applicants' in the passport applications in view of her admission in 313 statement that she was working in Goodluck Travels and assisting Rejendran (A3) in preparing applications and filing them before the Passport Office as well as handling the affairs connected therewith which clearly prove that A5 has filled up the said passport applications (Exhs. P2 to P43). We are also satisfied that the prosecution has clearly established that false documents were made for the purpose of cheating and those documents were used as genuine for obtaining CBI Vs. Ravi Kant Ruia and others Page 522 of 526 passports."
In an authority reported as Iridium India Telecom Limited Vs. Motorola Incorporated and Others, AIR 2011 SC 20, dealing with the question of cheating, Hon'ble Supreme Court observed in paragraphs 41 and 42 as under:
"41. The next important question which needs to be examined is as to whether the averments made in the complaint if taken on their face value would not prima facie disclose the ingredients for the offence of cheating as defined under Section 415 IPC. The aforesaid section is as under:
"Cheating. Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceive, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to "cheat".
Explanation - A dishonest concealment of facts is a deception within the meaning of the section."
42. A bare perusal of the aforesaid section would show that it can be conveniently divided into two parts. The first part makes it necessary that the deception by the accused of the person deceived, must be fraudulent or dishonest. Such deception must induce the person deceived to: either (a) deliver property to any person; or (b) consent that any person shall retain any property. The second part also requires that the accused must by deception intentionally induce the person deceived either to do or omit to do anything which he would not do or omit, if he was not so deceived.
Furthermore, such act or omission must cause or CBI Vs. Ravi Kant Ruia and others Page 523 of 526 must be likely to cause damage or harm to that person in body, mind, reputation or property. Thus, it is evident that deception is a necessary ingredient for the offences of cheating under both parts of this section. The complainant, therefore, necessarily needs to prove that the inducement had been caused by the deception exercised by the accused. Such deception must necessarily produce the inducement to part with or deliver property, which the complainant would not have parted with or delivered, but for the inducement resulting from deception. The explanation to the section would clearly indicate that there must be no dishonest concealment of facts. In other words, nondisclosure of relevant information would also be treated as a misrepresentation of facts leading to deception.
It was, therefore, necessary for the High Court to examine the averments in the complaint in terms of the aforesaid section. The High Court upon detailed examination of the 1992 PPM, the Stock Purchase Agreements and the 1995 PPM concluded that even if the averments made in the complaint are accepted on their face value, it would only disclose a civil dispute between the parties."
463. I have already extracted the deposition of all the witnesses in great detail. Prosecution has examined as many as thirteen witnesses from DoT, the alleged victim of cheating. PW 88 Sh. A. K. Srivastava is the principal witness in the case. He did not say a word as to what representation was made and by whom. He was ambivalent and vacillating in his deposition about the allegations in the complaint. Other witnesses also did not depose anything about the filing of applications, processing thereof or filing of Clause 8 Certificates. There is nothing in their deposition that any misrepresentation was made by any of CBI Vs. Ravi Kant Ruia and others Page 524 of 526 the accused to them.
464. Even otherwise, the case of the prosecution is that Loop Telecom Limited was a company of Essar group or was substantially controlled by it and as such it was not eligible for applying UAS licences. However, as already noted above, the prosecution has failed to prove this. When the prosecution has failed to prove that Loop Telecom Limited was a company of Essar group or was substantially controlled by it, there can be no false representation. Accordingly, there is no evidence on record to prove that ingredients of Section 420 IPC relating to cheating are made out.
465. In an authority reported as Bhagwan Swarup Lal Bishan Lal Vs. State of Maharashtra, AIR 1965 SC 682, Hon'ble Supreme Court, in paragraph 11, observed about conspiracy being a separate offence as under:
"................................................................................. ................................................................................... The offence of a conspiracy to commit a crime is a different offence from the crime that is the object of the conspiracy because the conspiracy precedes the commission of the crime and is complete before the crime is attempted or completed, equally the crime attempted or completed does not require the element of conspiracy as one of its ingredients. They are, therefore, quite separate offences. ................................................................................... ................................................................................."
In the instant case, there is no material on record to show that the applications for 21 UAS licences were filed at the instance of Sh. Vikash Saraf. There is also no evidence that in CBI Vs. Ravi Kant Ruia and others Page 525 of 526 the filing of applications Sh. Ravi Kant Ruia, Sh. Anshuman Ruia or Ms. Kiran Khaitan were involved. The evidence is to the effect that the applications were filed at the instance of Sh. I. P. Khaitan, which version matches with the record. Thus, there is no evidence indicating any deception of DoT by any of the accused.
466. In view of the above detailed discussion, prosecution has not been successful in proving any of the ingredients either of the offence of conspiracy to cheat DoT or of the substantive offence of cheating.
467. Accordingly, I have absolutely no hesitation in holding that prosecution has miserably failed to prove any charge against any of the accused. Consequently, all accused are entitled to be acquitted and are accordingly acquitted.
468. Bail bonds of the accused are hereby cancelled and sureties stand discharged. Documents, if any, of the sureties be returned to them after cancellation of endorsement thereon, if any.
469. In terms of provisions of Section 437A CrPC, each accused is directed to furnish bail bond in the sum of Rs. Five lac with one surety in the like amount for appearance before the Hon'ble Appellate Court, as and when, required.
470. File be consigned to the Record Room.
Announced in open Court (O. P. Saini)
today on 21.12.2017 Spl. Judge/ CBI(04)/ PMLA
(2G Spectrum Cases)
New Delhi
CBI Vs. Ravi Kant Ruia and others Page 526 of 526