Distacom drags Spice to court

Says Spice & Siemens tried to withdraw $13mn from Spice account without board approval.

Distacom Communications Ltd has accused Spice Communications Ltd and Siemens Aktiengesellschaft of attempting to withdraw $13 million from Spice's bank accounts without the company's board approval. Distacom has 49 per cent stake in Spice, with the remaining shares held by the BK Modi-promoted MCorp Global.

In a petition filed in the Delhi High Court, Distacom has sought that the Modi group and Siemens Aktiengesellschaft be restrained "from frittering away or releasing assets belonging to Spice, contrary to its (Distacom's) rights and interests".

Mauritius-based Distacom has also alleged that the Modi group, while "purporting to represent Spice, was acting against the interest of the company".

While executives at Spice and Siemens Aktiengesellschaft refused to comment stating that the matter was sub-judice, Distacom executives could not be reached for comments.

The issue dates back to 1996, when Siemens Aktiengesellschaft had entered into a contract with Spice Communications to supply telecommunication hardware.

Siemens had then provided credit support for long -term banking facilities undertaken by Spice for the equipment. Distacom, as one of the guarantors to this deal, had pledged 9.8 per cent of its stake in Spice to Siemens.

As Spice had defaulted in its repayment, the High Court of Justice, Queens Bench Division, Commercial Court in England, in April 2002, directed the company to pay $61,577 with interest to Siemens Aktiengesellschaft.

Further, acting on a petition by Siemens the Delhi High Court in August 2002, had restrained Spice from withdrawing an amount equivalent to Rs 280 crores from its accounts.

In a subsequent order, the Delhi High Court had said that Spice would be permitted to take an amount of Rs 15 crore from its bank accounts for its day-to-day expenses.

Later, the Delhi High Court vacated the August order restraining Spice from withdrawing an amount equivalent to Rs 280 crore and instead told the firm to deposit Rs 9 crore with the Registrar of court within a week and also directed warrant of attachment of 261,489,400 shares held by the Modi Group. Both the Modi Group and Siemens have filed appeals against this order.

Even as these appeals are pending, Distacom has said that Modi Group in collusion with Siemens had agreed to transfer $13 million of Spice in Deutsche Bank accounts to vendors including the latter and also Motorola. Distacom has also written to the Deutsche Bank objecting to the release of the money.

At Loggerheads

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DISTACOM has sought the Modi group and Siemens Aktiengesellschaft to be restrained from "frittering away or releasing assets belonging to Spice"

IT ALLEGES that the Modi group acted against the interest of Spice while purporting to represent it

THE COMPANY has also written to the Deutsche Bank objecting to the release of the money