The Delhi High Court today reserved verdict on the merger of Aditya Birla Group firm Idea Cellular and Spice Communications which has come under scanner for suppression of facts and said if allegations are found to be true, top executives may face criminal action.
The Department of Telecommunications (DoT) has challenged the 2008 merger, accusing the two companies of suppressing facts about the demerging of overlapping licences in the same circles.
The court indicated that if allegations of fraud and non-disclosure are found as true it may not prefer to recall the merger, as its will punish a large number of stakeholders, but the Chairman and Managing Director (CMD) and other senior officials of Idea may face criminal contempt proceedings.
"If I find suppression of fact and fraud why should I punish the common shareholder of Idea. It is a huge company. If I reach that conclusion I will initiate contempt proceeding against its CMD and other officers who filed the affidavits," said Justice Manmohan.
"This is very strange case. They [Idea] forget their own scheme. It is height of inefficiency. They are in contempt of court. They said demerger of licences in the merger scheme and then forgot. Their scheme needs drastic amendment," he said.
Additional Solicitor General AS Chandhiok had pleaded to the court that orders allowing the merger must be recalled if it is found that the company suppressed relevant facts to secure it.
"If they played fraud [to secure the order] they must face the consequences. Let the public learn lesson with whom they ant to be shareholders," Chandhiok said.
The judge, however, said that if the merger order is recalled Spice will come to exist again and it will adversely affect the stakeholders.