27 December 2017

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Part 2 In depth 2G scam story Facts 2G case CBI vs A Raja and others

Part 2 In depth 2G scam story Facts 2G case CBI vs A Raja and others

2G SPECTRUM CASE -  O. P. SAINI: SPL. JUDGE, CBI NEW DELHI

It is alleged that the DOT had been following the principle of first come first served basis for allocation of UAS Licences since the year 2003 and this principle was adopted
from the procedure followed for the allocation of spectrum for WLL services of Basic telephone operators.

The first come first served principle meant that the applicant which applied first
shall be allocated LOI, Licence and spectrum first. This existing procedure was also described, almost correctly, as Alternative I in the DOT letter dated 26.10.2007 addressed to Ministry of Law & Justice, which was approved by the MOC&IT himself.

 It is alleged that under the existing procedure / policy for allocation of licences on first come first served principle, LOI was issued first to an applicant who had applied
first. Then sufficient time was given for compliance of LOI conditions.

The LOI prescribed a time of seven days for acceptance / compliance of the LOI and fifteen days to deposit Entry Fee and Performance Bank Guarantee (PBG) / Financial Bank Guarantee (FBG).

Licences were, then, also issued on the same priority as per dates of application. After issuance of licence, the licencee was required to make an application before Wireless, Planning & Coordination (WPC) Wing of DOT for allocation of spectrum. This gap facilitated time lead to an applicant to retain his date of application seniority at all stages.

Manipulation of first­come first­served by A. Raja –

It is alleged that on 02.11.2007, Director (AS­I), DOT put up a note seeking orders on issuing LOIs as per existing policy which was approved by MOC&IT

Accused A. Raja although approved the note, but with dishonest intention and in
furtherance to the conspiracy deleted para 3 of the draft LOI, which was also put up vide this note. The said para 3 mentioned that “the date of payment of entry fee would be the priority date for signing of licence agreement. If the date of payment of entry fee in more than one case is same then license will be first signed with the applicant company whose application was received earlier”.

It is alleged that, in aforesaid manner the DOT officials tried to prevent accused A. Raja to proceed ahead with his design to delete a clause which would have resulted in
reshuffling of the priority from the date of application to time of submission of compliance of LOIs. Accused A. Raja, therefore, had no option but to clarify that LOIs in previously used proforma may be issued, because the revision of LOI proforma
as suggested by DOT officers would have thwarted his design prematurely. He, therefore, directed that a separate letter seeking duly signed copies of all the documents submitted at the time of applying for UASL as per existing guidelines may be obtained, thereby mandating that eligibility on the date of application was essential requirement. Such letters were thereafter issued to each applicant during December, 2007 asking for the certificates that the companies met various eligibility parameters as on date of application and thereafter.

Letter to PM by A. Raja –

he wrote a letter dated 26.12.2007 to Hon’ble PM, with the help of accused R K Chandolia. In this letter he intentionally and deliberately misrepresented the facts about first­come firstserved policy and wrote, in the context of ‘Issue of New Licences’ that:­
“DoT has been implementing a policy of First­ comeFirst Served for grant of UAS licences. The same policy is proposed to be implemented in granting licence to
existing applicants. However, it may be noted that grant of UAS licence and allotment of Radio Frequency is a three stage process.

Since the file for issue of LOI to all eligible applicants was approved by me on 2.11.2007, it is proposed to implement the decision without further delay and without any departure from existing guidelines.”

It is alleged that the aforesaid letter was drafted by accused A. Raja and accused R. K. Chandolia at the camp officecum­residence of accused

It is alleged that when this matter was put up on 7.1.2008 before accused Siddhartha Behura, Secretary (Telecom), he attached a draft press release for approval of
MOC&IT.

It is alleged that MOC&IT ‘approved’ the same and asked Secretary to obtain Solicitor General’s opinion

Solicitor General of India, who advised – “I have seen the matter. The issues regarding new LOI’s are not before any court. What is proposed is fair and reasonable. The press release makes for transparency. This seems to be in order.” It is alleged that accused A. Raja, in conspiracy with accused Siddhartha Behura subsequently struck out the last para of the press release, which mentioned ­ “However, if more than one applicant complies with LOI condition on the same date, the inter­se seniority would be decided by the date of application”.

It is also alleged that, when accused A. Raja struck out last para of draft press release, at the same time he also inserted, in his aforementioned note dated 07.01.2008, the words – “press release appd as amended”. This insertion in his note was willfully done by accused A. Raja

In this manner he falsified the records in furtherance of his design to cheat DOT by
manipulating the allocation of new licences in a manner wrongfully benefitting the accused

This amendment in the press release led to redefining the concept of first­come first­served on the basis of priority in submission of compliance to the LOI against the established practice of priority in order of receipt of applications. It is alleged that this press release was issued to the public on 10.1.2008 at 1347 hours

It is further alleged that as per the ill­conceived design of distribution of LOIs and receipt of LOI compliance / Entry Fee, etc., applicant company representatives were
required to rush to the reception area of the Sanchar Bhawan at Ground Floor, after receiving the LOIs, for submission of LOI compliance / Entry Fee, etc. As a result of the said conspiracy, M/s Swan Telecom Pvt. Ltd. was the first to submit compliances
for Delhi (where spectrum was limited for one licensee only) and Mumbai circles; and M/s Unitech Wireless (Tamilnadu) Pvt. Ltd. were able to get priority in all circles over many other applicants which had applied much before it.

It is alleged that the accused persons connected with M/s. Swan Telecom Pvt. Ltd. and M/s Unitech Ltd. had prior knowledge of such ill­conceived design of first­come first­served process and had been keeping the demand drafts ready since early November, 2007 and October, 2007 itself, respectively.

M/s Swan Telecom Pvt. Ltd. had got first FBG & PBGs made for 2 circles as early as first half of November, 2007. It was subsequently changed to Delhi and Mumbai, in view of the advance knowledge that spectrum was limited in metros especially in Delhi circle. The first manifestation of the knowledge of M/s Swan Telecom about the manner in which the policy shall be implemented is seen in the fact that M/s Swan Telecom Pvt. Ltd. applied to Punjab National Bank for loan as early as in October, 2007 and mentioned that the Demand Drafts would be required at a very short notice as these
are required to be deposited as soon as the LOI would be issued

Similarly, M/s Unitech Wireless (Tamilnadu) Pvt. Ltd. also had its DDs ready by 10th October 2007, even before the decision was taken to call the applicants for the issuance of LOIs by twisting the FCFS policy giving priority for issue of licences to those who complied with LOI conditions first. In December 2007, through media reports, such indications became public and most of the companies were thereafter, keeping their demand drafts / PBG/FBG, etc. ready for depositing whenever called for

It is alleged that accused A. Raja, in conspiracy with other accused persons, did not accord in­principle approval to M/s TTSL / M/s TTML till 10.01.2008, when LOIs for new licences were distributed to applicants till 25.09.2007, and dishonestly clubbed the distribution of in­principle approvals to TTSL/TTML with distribution of LOIs for new licences.

It is further alleged that accused R K Chandolia rented his residential property C­6/39 second floor, Safdarjung Development Area, New Delhi to M/s Associated Hotels Pvt.
Ltd. (a sister concern of M/s. D B Realty Ltd.) on 03.03.2009, on a monthly Rs. 63,000/­.


It is alleged that M/s Swan Telecom Pvt. Ltd.,despite being the only company to receive spectrum in Delhi service area, among new licencees, since 2008 did not roll out
its services and failed to meet the roll­out obligations, and continued to receive the patronage of accused A. Raja till he demitted the office of MOC&IT

It is also alleged M/s Etisalat (Mauritius) Ltd., a group company of M/s Emirates Telecommunications Corporation (ETISALAT) of UAE, subscribed to 11,29,94,228
shares of the M/s Swan Telecom Pvt. Ltd. on 17.12.2008 for a total consideration of Rs.3228,44,61,409/­ (Rs. 3228 Crore).

Similarly, M/s Genex Exim Ventures Pvt. Ltd. subscribed to 1,33,17,245 shares of the company on 17.12.2008 for a total consideration of Rs.380,49,73,846/­ (Rs. 380 Crore). It is alleged that this amount of Rs. 380 Crore was arranged by M/s Genex Exim Ventures Pvt. Ltd. through M/s ETA Star Infrastructure Ltd. having its account at Oriental Bank of Commerce, Goregaon, Mumbai.

It is alleged that M/s Al Waha Investments Ltd., Dubai, UAE, remitted Rs. 380 crore from Mashreq Bank, Dubai on 17.12.2008 in favour of M/s ETA Star Infrastructure Ltd. at its aforesaid account. This amount was transferred by M/s ETA Star Infrastructure Ltd. to M/s Genex Exim Ventures Pvt. Ltd., which used the same for taking aforesaid equity in M/s Swan Telecom Pvt. Ltd. As per the said subscriptions, price of each share of Rs. 10/­ comes at Rs. 285.7178, meaning thereby a premium of Rs.275.7178 on each
share. The total no. of shares held by M/s Tiger Trustees Pvt. Ltd., having 90.1% equity of M/s Swan Telecom Pvt. Ltd., which was wholly held by DB group, prior to entry of M/s Etisalat (Mauritius) Ltd. was 10,22,19000. At a premium of Rs.275.7178, the total value of shares held by M/s Tiger Trustees Pvt. Ltd., held by Dynamix Balwa group of companies promoted by accused Shahid Balwa and Vinod Goenka, comes at Rs.2818.3597 Crore.

It is further alleged that a subscription agreement dated 28.10.2008 between various Unitech group companies, their holding companies and M/s Telenor Asia Pvt. Ltd. &
Telenor Mobile Communications AS, Telenor agreed to infuse extra equity into the companies for 66.5% stake. The pre money enterprise value of the company was pegged at Rs. 4400 Crore of which Rs. 1146.7 Crore was external debt and Rs. 773 Crore
as shareholders loans. Net pre money equity value of the promoters was treated as Rs. 2480 Crore. Accordingly the investment consideration of Telenor was kept at Rs. 5093 Crore.

Actual investment of promoters in equity was Rs. 138 Crore, which was valued at Rs. 2480 Crore, indicating a gain of Rs. 2342 Crore to promoters of M/s Unitech Wireless
It is alleged that M/s Telenor Asia Pvt. Ltd.subscribed to 340,532,767 shares of the company during the period 20.03.2009 to 22.02.2010, in six tranches. These shares
were allotted at total consideration of Rs. 6135,62,53,270/­ (Rs. 6135 Crore). Price of each share of Rs. 10/­ comes at Rs. 179.731, meaning thereby a premium of Rs.169.731 on each share. The total no. of shares held by Unitech group in 8 group companies of Unitech Wireless, prior to agreement with Telenor was 138000000. At a premium of Rs.169.731, the total premium amount / gain to the Unitech group as such comes at
Rs.2342.2878 Crore, which is the same amount as arrived at according to the agreement.

It is alleged that in January­February, 2007 accused Gautam Doshi (A­9), Surendra Pipara (A­10) and Hari Nair (A­ 11) in furtherance to their common intention to cheat the Department of Telecommunications, structured/ created net worth of a company M/s Swan Telecom Pvt. Ltd., out of funds arranged from M/s Reliance Telecom Ltd. (A­12) or its associates, for applying to the DOT for UAS Licences in 13 circles, where M/s Reliance Telecom Ltd. had no GSM spectrum, in a manner that its association with M/s Reliance Telecom Ltd. may not be detected, so that DOT could not reject its
applications on the basis of clause 8 of the UASL Guidelines dated 14.12.2005 . The clause 8 of the UASL guidelines is as mentioned 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 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.”

In pursuance to the said common intention of accused persons, they structured the stake­holdings of M/s Swan Telecom Pvt. Ltd. in a manner that only 9.9 % equity was
held by M/s Reliance Telecom Ltd. (RTL) and rest 90.1% was shown as held by M/s Tiger Traders Pvt. Ltd. (later known as M/s Tiger Trustees Pvt. Ltd. ­ TTPL), although the entire company was held by the Reliance ADA Group of companies through the funds raised from M/s Reliance Telecom Ltd. etc.

It is alleged that M/s Swan Telecom Pvt. Ltd. (STPL) was, at the time of application dated 02.03.2007, an associate of M/s Reliance ADA Group / M/s Reliance Communications Limited / M/s Reliance Telecom Limited, having existing UAS
Licences in all telecom circles.

It is alleged that M/s Tiger Traders Pvt. Ltd., which held majority stake (more than 90%) in M/s Swan Telecom Pvt. Ltd. (STPL), was also an associate company of Reliance ADA Group.

Both the companies had no business history and were activated solely for the purpose of applying for UAS Licences in 13 telecom circles, where M/s Reliance Telecom Ltd. did not have GSM spectrum and M/s Reliance Communications Ltd. had already applied for dual technology spectrum for these circles.

It is further alleged that the day­to­day affairs of M/s Swan Telecom Pvt. Ltd. and M/s Tiger Traders Pvt. Ltd. were managed by the said three accused persons either themselves or through other officers / consultants related to the Reliance ADA group. Commercial decisions of M/s Swan Telecom Pvt. Ltd. and M/s Tiger Traders Pvt. Ltd. were also taken by these accused persons of Reliance ADA group. Material inter­company transactions (bank
transactions) of M/s Reliance Communications/ M/s Reliance Telecommunications Ltd. and M/s Swan Telecom Pvt. Ltd.

(STPL) and M/s Tiger Traders Pvt. Ltd. were carried out by same group of persons as per the instructions of said accused Gautam Doshi and Hari Nair.

t is alleged that holding structure of M/s Tiger Traders Pvt. Ltd. has revealed that the aforesaid accused persons also structured two other companies i.e. M/s Zebra Consultancy Private Limited & M/s Parrot Consultants Private Limited.

Till April, 2007, by when M/s Swan Telecom Pvt. Ltd. applied for telecom licenses, 50% shares of M/s Zebra Consultancy Private Limited & M/s Parrot Consultants Private Limited, were purchased by M/s Tiger Traders Pvt. Ltd. Similarly, 50% of equity shares of M/s Parrot Consultants Private Limited & M/s Tiger Traders Private Limited were purchased by M/s Zebra Consultancy Private Limited. Also, 50% of equity shares of M/s
Zebra Consultancy Private Limited and M/s Tiger Traders Private Limited were purchased by M/s Parrot Consultants Private Limited. These three companies were, therefore, cross holding each other in an inter­locking structure.

Accused Hari Nair, in league with accused Gautam Doshi and accused Surendra Pipara, however dishonestly misrepresented to DOT that M/s Tiger Traders Pvt. Ltd. was held by India Telecom Infrastructure Fund held by Ashok Wadhwa group of companies, when DOT asked clarification about the holding structure of M/s Tiger Traders Pvt. Ltd. in March, 2007.

It is alleged about M/s Tiger Traders Pvt Limited (TTPL) that funds to raise its equity and also to subscribe shares of other companies had also come from group companies of Reliance ADA group. Further the source of funds i.e. Rs. 3 crore
during January 2007 and Rs. 95.51 Crore during March, 2007, utilized by M/s Tiger Traders Pvt Ltd to subscribe to majority equity of M/s Swan Telecom Pvt. Ltd. (STPL), has been arranged through the group companies of Reliance ADA Group.

Moreover, a sum of Rs.992 crore, which constituted bulk of the networth of M/s.STPL, was also paid by Reliance Telecom Ltd. under the garb of subscribing the preference share of STPL. The preference shares were purchased at an abnormally high premium of Rs. 999/­ per share (face value Rs.1) of the
company which had no business history. Moreover, the entire amount of Rs.992 crore was immediately returned by STPL to Reliance Communication Ltd. showing an advance to a purchase order.

It is further alleged that the said transactions were carried out at the instructions of accused Gautam Doshi and Hari Nair.
During the relevant period, the board meetings of M/s Swan Telecom Pvt. Ltd. (STPL) & TTPL were chaired by accused Surendra Pipara and he was party to all decisions taken. It shows that till October, 2007, M/s Swan Telecom Pvt. Ltd. was
an associate of companies of Reliance ADA Group, including M/s Reliance Telecom Ltd./ Reliance Communications Ltd., which held pan India telecom licenses. As such on the date of application, M/s Swan Telecom Pvt. Ltd. (STPL) was ineligible as its application was in violation of clause 8 of UASL guidelines
dated 14.12.2005 regarding substantial equity. It is further alleged that the other companies including M/s Swan Consultants Services Pvt. Ltd., M/s AAA Consultancy Services Co. Pvt. Ltd., M/s ADAE Ventures Pvt. Ltd., M/s
Giraffe/Siddhartha Consultancy Services Pvt. Ltd., M/s Sonata Investments Ltd., M/s Zebra Consultancy Services Pvt. Ltd., M/s Parrot Consultants Services Pvt. Ltd. etc., which have been used to transfer funds / hold M/s Tiger Traders Pvt. Ltd. (TTPL) and M/s Swan Telecom Pvt. Ltd. (STPL), were also associate companies of Reliance ADA Group

It is alleged that accused Gautam Doshi, Group President of Reliance ADA Group and director / board member, M/s Reliance Telecom Ltd., with others has played an active role in structuring and funding of M/s Swan Telecom Pvt. Ltd.

(STPL), TTPL and other companies. Further all important decisions regarding transfer of funds to TTPL / M/s Swan Telecom Pvt. Ltd. (STPL) through various companies were taken by him. Further the commercial decisions on behalf of M/s
Reliance Telecom Ltd. including investments in M/s Swan Telecom Pvt. Ltd. (STPL), transfer of shares to Delphi Investment Ltd., etc have also been taken by him.

It is alleged that accused Hari Nair, in collusion with accused Gautam Doshi and Surendra Pipara structured different companies. He has been instrumental in transferring of funds of Rs. 95.51 Crore and Rs. 3 Crore to TTPL and Swan Telecom Pvt.Ltd. (STPL). Besides being company Secretary of Swan Telecom
Pvt. Ltd. (STPL) Ltd., he was also on the board to various companies and also the authorized bank signatory.

As Company Secretary of M/s Swan Telecom Pvt. Ltd. (STPL), he in league
with accused Gautam Doshi and Surendra Pipara, dishonestly and fraudulently submitted false information to DOT under his signatures regarding its share holding by different companies thereby concealing the material facts, which could lead DOT to consider the company as ineligible for getting a UAS license. He
along with accused Gautam Doshi was party to different
commercial decisions taken on behalf of different companies. As such he has played active role in management of day­to­day affairs of different companies including Swan Telecom Pvt. Ltd. (STPL) and TTPL.

It is alleged that accused Surendra Pipara in league with accused Gautam Doshi and Hari Nair has prepared false minutes of board meetings of M/s Swan Telecom Pvt. Ltd (STPL) and TTPL showing appointment of one Sh. Ashok Wadhwa as Director and his presence during the meetings. He has also presided over board meetings of M/s Swan Telecom Pvt. Ltd. (STPL) when the crucial decisions regarding raising its equity, allotment of shares, applications to DoT etc. were taken by M/s Swan Telecom Pvt. Ltd. (STPL). Similarly he chaired the Board Meetings of TTPL when the company subscribed majority equity in M/s Swan Telecom Pvt. Ltd. (STPL) and funds for the purpose were arranged. As Director in STPL and TTPL, he was also representing the interests of Reliance Telecom Ltd.
Therefore, he along with accused Gautam Doshi and Hari Nair were managing day­to­day affairs of the companies during the relevant period i.e. January, 2007 to March, 2007.

It is further alleged that Ministry of Corporate Affairs has also confirmed vide a report of Registrar of Companies, Mumbai that M/s Swan Telecom Pvt. Ltd. was an associate of M/s Reliance Telecom Ltd. and M/s Reliance Communications Ltd. It is alleged that M/s Reliance Telecom Ltd., which is a subsidiary of M/s Reliance Communications Ltd., had invested in M/s Swan Telecom Pvt. Ltd. (STPL) in
form of minority equity stake and preference shares. However, the investment towards equity shares of M/s Swan Telecom Pvt. Ltd. (STPL) was within permissible limits i.e. less than 10 %. All the said persons, in league with each other, belonged to M/s Reliance Telecom Ltd. and were authorized by M/s Reliance Telecom Ltd. to represent its interests in M/s Swan Telecom Pvt.
Ltd

It is alleged that pursuant to TRAI recommendations dated 28.08.2007 when M/s Reliance Communications Ltd. Got the GSM spectrum under the Dual Technology policy, accused Gautam Doshi, Hari Nair and Surendra Pipara transferred the
control of M/s Swan Telecom Pvt. Ltd., and said structure of holding companies, to accused Shahid Balwa and Vinod Goenka. In this manner they transferred a company which was otherwise ineligible for grant of UAS license on the date of
application, to the said two accused persons belonging to Dynamix Balwa (DB) group and thereby facilitated them to cheat the DOT by getting issued UAS Licences despite the ineligibility on the date of application and till 18.10.2007

It is alleged that accused Shahid Balwa and Vinod Goenka joined M/s Swan Telecom Pvt. Ltd. and M/s Tiger Traders Pvt. Ltd. as directors on 01.10.2007 and DB group acquired the majority stake in TTPL / M/s Swan Telecom Pvt.
Ltd. (STPL) on 18.10.2007. On 18/10/2007 a fresh equity of 49.90 lakh shares was allotted to M/s DB Infrastructure Pvt. Ltd. Therefore on 01.10.2007, and thereafter, accused Shahid Balwa and Vinod Goenka were in­charge of, and were responsible to, the company M/s Swan Telecom Pvt. Ltd. for the conduct of its business. As such on this date, majority shares of the company were held by D.B. Group. M/s Siddhartha Consultancy Services Pvt. Ltd., a holding company of M/s Tiger
Traders Pvt Ltd before October, 2007, also later transferred its shares to Shahid Balwa and Vinod Goenka (5000 each).

Thereafter, accused Shahid Balwa, in conspiracy with accused Vinod Goenka, created false documents including board minutes of M/s Giraffe Consultancy Pvt. Ltd., etc, fraudulently showing transfer of its shares by the companies of Reliance ADA Group during February, 2007 itself. It is further alleged that accused
Shahid Balwa, in conspiracy with accused Vinod Goenka, either concealed or furnished false information to DOT regarding share holding pattern of M/s Swan Telecom Pvt. Ltd. (STPL) as on date of application.

It is alleged that certain complaints alleging substantial stake of Reliance ADA group in M/s Swan Telecom Pvt. Ltd. (STPL) as on date of application, were received by DOT. However, the same were not considered by the accused
Siddhartha Behura and accused A. Raja and M/s Swan Telecom  Pvt. Ltd. (STPL) was declared eligible for issuing LOI for UAS Licence.

It is alleged that accused A. Raja & Siddhartha Behura, in criminal conspiracy with accused Shahid Balwa and Vinod Goenka, Directors of M/s Swan Telecom Pvt. Ltd., abused their official position and without initiating any enquiry suggested by LF branch in respect of complaints received against M/s Swan Telecom Pvt. Ltd. and thereby allowed the said ineligible company to get LOI, UAS Licence and spectrum, despite there being sufficient material to raise doubt about eligibility of M/s Swan Telecom Pvt. Ltd. for getting UAS Licence. It is alleged that for being ineligible on date of application, many other applicants were denied Letters of Intent and thus no licences could be issued to those companies which were ineligible on the date of application

Suggested Reading –

Part 1 In depth 2G scam story Facts 2G case CBI vs A Raja and others

Part 2 In depth 2G scam story Facts 2G case CBI vs A Raja and others

2G SPECTRUM CASE -  O. P. SAINI: SPL. JUDGE, CBI NEW DELHI

It is alleged that the DOT had been following the principle of first come first served basis for allocation of UAS Licences since the year 2003 and this principle was adopted
from the procedure followed for the allocation of spectrum for WLL services of Basic telephone operators.

The first come first served principle meant that the applicant which applied first
shall be allocated LOI, Licence and spectrum first. This existing procedure was also described, almost correctly, as Alternative I in the DOT letter dated 26.10.2007 addressed to Ministry of Law & Justice, which was approved by the MOC&IT himself.

 It is alleged that under the existing procedure / policy for allocation of licences on first come first served principle, LOI was issued first to an applicant who had applied
first. Then sufficient time was given for compliance of LOI conditions.

The LOI prescribed a time of seven days for acceptance / compliance of the LOI and fifteen days to deposit Entry Fee and Performance Bank Guarantee (PBG) / Financial Bank Guarantee (FBG).

Licences were, then, also issued on the same priority as per dates of application. After issuance of licence, the licencee was required to make an application before Wireless, Planning & Coordination (WPC) Wing of DOT for allocation of spectrum. This gap facilitated time lead to an applicant to retain his date of application seniority at all stages.

Manipulation of first­come first­served by A. Raja –

It is alleged that on 02.11.2007, Director (AS­I), DOT put up a note seeking orders on issuing LOIs as per existing policy which was approved by MOC&IT

Accused A. Raja although approved the note, but with dishonest intention and in
furtherance to the conspiracy deleted para 3 of the draft LOI, which was also put up vide this note. The said para 3 mentioned that “the date of payment of entry fee would be the priority date for signing of licence agreement. If the date of payment of entry fee in more than one case is same then license will be first signed with the applicant company whose application was received earlier”.

It is alleged that, in aforesaid manner the DOT officials tried to prevent accused A. Raja to proceed ahead with his design to delete a clause which would have resulted in
reshuffling of the priority from the date of application to time of submission of compliance of LOIs. Accused A. Raja, therefore, had no option but to clarify that LOIs in previously used proforma may be issued, because the revision of LOI proforma
as suggested by DOT officers would have thwarted his design prematurely. He, therefore, directed that a separate letter seeking duly signed copies of all the documents submitted at the time of applying for UASL as per existing guidelines may be obtained, thereby mandating that eligibility on the date of application was essential requirement. Such letters were thereafter issued to each applicant during December, 2007 asking for the certificates that the companies met various eligibility parameters as on date of application and thereafter.

Letter to PM by A. Raja –

he wrote a letter dated 26.12.2007 to Hon’ble PM, with the help of accused R K Chandolia. In this letter he intentionally and deliberately misrepresented the facts about first­come firstserved policy and wrote, in the context of ‘Issue of New Licences’ that:­
“DoT has been implementing a policy of First­ comeFirst Served for grant of UAS licences. The same policy is proposed to be implemented in granting licence to
existing applicants. However, it may be noted that grant of UAS licence and allotment of Radio Frequency is a three stage process.

Since the file for issue of LOI to all eligible applicants was approved by me on 2.11.2007, it is proposed to implement the decision without further delay and without any departure from existing guidelines.”

It is alleged that the aforesaid letter was drafted by accused A. Raja and accused R. K. Chandolia at the camp officecum­residence of accused

It is alleged that when this matter was put up on 7.1.2008 before accused Siddhartha Behura, Secretary (Telecom), he attached a draft press release for approval of
MOC&IT.

It is alleged that MOC&IT ‘approved’ the same and asked Secretary to obtain Solicitor General’s opinion

Solicitor General of India, who advised – “I have seen the matter. The issues regarding new LOI’s are not before any court. What is proposed is fair and reasonable. The press release makes for transparency. This seems to be in order.” It is alleged that accused A. Raja, in conspiracy with accused Siddhartha Behura subsequently struck out the last para of the press release, which mentioned ­ “However, if more than one applicant complies with LOI condition on the same date, the inter­se seniority would be decided by the date of application”.

It is also alleged that, when accused A. Raja struck out last para of draft press release, at the same time he also inserted, in his aforementioned note dated 07.01.2008, the words – “press release appd as amended”. This insertion in his note was willfully done by accused A. Raja

In this manner he falsified the records in furtherance of his design to cheat DOT by
manipulating the allocation of new licences in a manner wrongfully benefitting the accused

This amendment in the press release led to redefining the concept of first­come first­served on the basis of priority in submission of compliance to the LOI against the established practice of priority in order of receipt of applications. It is alleged that this press release was issued to the public on 10.1.2008 at 1347 hours

It is further alleged that as per the ill­conceived design of distribution of LOIs and receipt of LOI compliance / Entry Fee, etc., applicant company representatives were
required to rush to the reception area of the Sanchar Bhawan at Ground Floor, after receiving the LOIs, for submission of LOI compliance / Entry Fee, etc. As a result of the said conspiracy, M/s Swan Telecom Pvt. Ltd. was the first to submit compliances
for Delhi (where spectrum was limited for one licensee only) and Mumbai circles; and M/s Unitech Wireless (Tamilnadu) Pvt. Ltd. were able to get priority in all circles over many other applicants which had applied much before it.

It is alleged that the accused persons connected with M/s. Swan Telecom Pvt. Ltd. and M/s Unitech Ltd. had prior knowledge of such ill­conceived design of first­come first­served process and had been keeping the demand drafts ready since early November, 2007 and October, 2007 itself, respectively.

M/s Swan Telecom Pvt. Ltd. had got first FBG & PBGs made for 2 circles as early as first half of November, 2007. It was subsequently changed to Delhi and Mumbai, in view of the advance knowledge that spectrum was limited in metros especially in Delhi circle. The first manifestation of the knowledge of M/s Swan Telecom about the manner in which the policy shall be implemented is seen in the fact that M/s Swan Telecom Pvt. Ltd. applied to Punjab National Bank for loan as early as in October, 2007 and mentioned that the Demand Drafts would be required at a very short notice as these
are required to be deposited as soon as the LOI would be issued

Similarly, M/s Unitech Wireless (Tamilnadu) Pvt. Ltd. also had its DDs ready by 10th October 2007, even before the decision was taken to call the applicants for the issuance of LOIs by twisting the FCFS policy giving priority for issue of licences to those who complied with LOI conditions first. In December 2007, through media reports, such indications became public and most of the companies were thereafter, keeping their demand drafts / PBG/FBG, etc. ready for depositing whenever called for

It is alleged that accused A. Raja, in conspiracy with other accused persons, did not accord in­principle approval to M/s TTSL / M/s TTML till 10.01.2008, when LOIs for new licences were distributed to applicants till 25.09.2007, and dishonestly clubbed the distribution of in­principle approvals to TTSL/TTML with distribution of LOIs for new licences.

It is further alleged that accused R K Chandolia rented his residential property C­6/39 second floor, Safdarjung Development Area, New Delhi to M/s Associated Hotels Pvt.
Ltd. (a sister concern of M/s. D B Realty Ltd.) on 03.03.2009, on a monthly Rs. 63,000/­.


It is alleged that M/s Swan Telecom Pvt. Ltd.,despite being the only company to receive spectrum in Delhi service area, among new licencees, since 2008 did not roll out
its services and failed to meet the roll­out obligations, and continued to receive the patronage of accused A. Raja till he demitted the office of MOC&IT

It is also alleged M/s Etisalat (Mauritius) Ltd., a group company of M/s Emirates Telecommunications Corporation (ETISALAT) of UAE, subscribed to 11,29,94,228
shares of the M/s Swan Telecom Pvt. Ltd. on 17.12.2008 for a total consideration of Rs.3228,44,61,409/­ (Rs. 3228 Crore).

Similarly, M/s Genex Exim Ventures Pvt. Ltd. subscribed to 1,33,17,245 shares of the company on 17.12.2008 for a total consideration of Rs.380,49,73,846/­ (Rs. 380 Crore). It is alleged that this amount of Rs. 380 Crore was arranged by M/s Genex Exim Ventures Pvt. Ltd. through M/s ETA Star Infrastructure Ltd. having its account at Oriental Bank of Commerce, Goregaon, Mumbai.

It is alleged that M/s Al Waha Investments Ltd., Dubai, UAE, remitted Rs. 380 crore from Mashreq Bank, Dubai on 17.12.2008 in favour of M/s ETA Star Infrastructure Ltd. at its aforesaid account. This amount was transferred by M/s ETA Star Infrastructure Ltd. to M/s Genex Exim Ventures Pvt. Ltd., which used the same for taking aforesaid equity in M/s Swan Telecom Pvt. Ltd. As per the said subscriptions, price of each share of Rs. 10/­ comes at Rs. 285.7178, meaning thereby a premium of Rs.275.7178 on each
share. The total no. of shares held by M/s Tiger Trustees Pvt. Ltd., having 90.1% equity of M/s Swan Telecom Pvt. Ltd., which was wholly held by DB group, prior to entry of M/s Etisalat (Mauritius) Ltd. was 10,22,19000. At a premium of Rs.275.7178, the total value of shares held by M/s Tiger Trustees Pvt. Ltd., held by Dynamix Balwa group of companies promoted by accused Shahid Balwa and Vinod Goenka, comes at Rs.2818.3597 Crore.

It is further alleged that a subscription agreement dated 28.10.2008 between various Unitech group companies, their holding companies and M/s Telenor Asia Pvt. Ltd. &
Telenor Mobile Communications AS, Telenor agreed to infuse extra equity into the companies for 66.5% stake. The pre money enterprise value of the company was pegged at Rs. 4400 Crore of which Rs. 1146.7 Crore was external debt and Rs. 773 Crore
as shareholders loans. Net pre money equity value of the promoters was treated as Rs. 2480 Crore. Accordingly the investment consideration of Telenor was kept at Rs. 5093 Crore.

Actual investment of promoters in equity was Rs. 138 Crore, which was valued at Rs. 2480 Crore, indicating a gain of Rs. 2342 Crore to promoters of M/s Unitech Wireless
It is alleged that M/s Telenor Asia Pvt. Ltd.subscribed to 340,532,767 shares of the company during the period 20.03.2009 to 22.02.2010, in six tranches. These shares
were allotted at total consideration of Rs. 6135,62,53,270/­ (Rs. 6135 Crore). Price of each share of Rs. 10/­ comes at Rs. 179.731, meaning thereby a premium of Rs.169.731 on each share. The total no. of shares held by Unitech group in 8 group companies of Unitech Wireless, prior to agreement with Telenor was 138000000. At a premium of Rs.169.731, the total premium amount / gain to the Unitech group as such comes at
Rs.2342.2878 Crore, which is the same amount as arrived at according to the agreement.

It is alleged that in January­February, 2007 accused Gautam Doshi (A­9), Surendra Pipara (A­10) and Hari Nair (A­ 11) in furtherance to their common intention to cheat the Department of Telecommunications, structured/ created net worth of a company M/s Swan Telecom Pvt. Ltd., out of funds arranged from M/s Reliance Telecom Ltd. (A­12) or its associates, for applying to the DOT for UAS Licences in 13 circles, where M/s Reliance Telecom Ltd. had no GSM spectrum, in a manner that its association with M/s Reliance Telecom Ltd. may not be detected, so that DOT could not reject its
applications on the basis of clause 8 of the UASL Guidelines dated 14.12.2005 . The clause 8 of the UASL guidelines is as mentioned 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 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.”

In pursuance to the said common intention of accused persons, they structured the stake­holdings of M/s Swan Telecom Pvt. Ltd. in a manner that only 9.9 % equity was
held by M/s Reliance Telecom Ltd. (RTL) and rest 90.1% was shown as held by M/s Tiger Traders Pvt. Ltd. (later known as M/s Tiger Trustees Pvt. Ltd. ­ TTPL), although the entire company was held by the Reliance ADA Group of companies through the funds raised from M/s Reliance Telecom Ltd. etc.

It is alleged that M/s Swan Telecom Pvt. Ltd. (STPL) was, at the time of application dated 02.03.2007, an associate of M/s Reliance ADA Group / M/s Reliance Communications Limited / M/s Reliance Telecom Limited, having existing UAS
Licences in all telecom circles.

It is alleged that M/s Tiger Traders Pvt. Ltd., which held majority stake (more than 90%) in M/s Swan Telecom Pvt. Ltd. (STPL), was also an associate company of Reliance ADA Group.

Both the companies had no business history and were activated solely for the purpose of applying for UAS Licences in 13 telecom circles, where M/s Reliance Telecom Ltd. did not have GSM spectrum and M/s Reliance Communications Ltd. had already applied for dual technology spectrum for these circles.

It is further alleged that the day­to­day affairs of M/s Swan Telecom Pvt. Ltd. and M/s Tiger Traders Pvt. Ltd. were managed by the said three accused persons either themselves or through other officers / consultants related to the Reliance ADA group. Commercial decisions of M/s Swan Telecom Pvt. Ltd. and M/s Tiger Traders Pvt. Ltd. were also taken by these accused persons of Reliance ADA group. Material inter­company transactions (bank
transactions) of M/s Reliance Communications/ M/s Reliance Telecommunications Ltd. and M/s Swan Telecom Pvt. Ltd.

(STPL) and M/s Tiger Traders Pvt. Ltd. were carried out by same group of persons as per the instructions of said accused Gautam Doshi and Hari Nair.

t is alleged that holding structure of M/s Tiger Traders Pvt. Ltd. has revealed that the aforesaid accused persons also structured two other companies i.e. M/s Zebra Consultancy Private Limited & M/s Parrot Consultants Private Limited.

Till April, 2007, by when M/s Swan Telecom Pvt. Ltd. applied for telecom licenses, 50% shares of M/s Zebra Consultancy Private Limited & M/s Parrot Consultants Private Limited, were purchased by M/s Tiger Traders Pvt. Ltd. Similarly, 50% of equity shares of M/s Parrot Consultants Private Limited & M/s Tiger Traders Private Limited were purchased by M/s Zebra Consultancy Private Limited. Also, 50% of equity shares of M/s
Zebra Consultancy Private Limited and M/s Tiger Traders Private Limited were purchased by M/s Parrot Consultants Private Limited. These three companies were, therefore, cross holding each other in an inter­locking structure.

Accused Hari Nair, in league with accused Gautam Doshi and accused Surendra Pipara, however dishonestly misrepresented to DOT that M/s Tiger Traders Pvt. Ltd. was held by India Telecom Infrastructure Fund held by Ashok Wadhwa group of companies, when DOT asked clarification about the holding structure of M/s Tiger Traders Pvt. Ltd. in March, 2007.

It is alleged about M/s Tiger Traders Pvt Limited (TTPL) that funds to raise its equity and also to subscribe shares of other companies had also come from group companies of Reliance ADA group. Further the source of funds i.e. Rs. 3 crore
during January 2007 and Rs. 95.51 Crore during March, 2007, utilized by M/s Tiger Traders Pvt Ltd to subscribe to majority equity of M/s Swan Telecom Pvt. Ltd. (STPL), has been arranged through the group companies of Reliance ADA Group.

Moreover, a sum of Rs.992 crore, which constituted bulk of the networth of M/s.STPL, was also paid by Reliance Telecom Ltd. under the garb of subscribing the preference share of STPL. The preference shares were purchased at an abnormally high premium of Rs. 999/­ per share (face value Rs.1) of the
company which had no business history. Moreover, the entire amount of Rs.992 crore was immediately returned by STPL to Reliance Communication Ltd. showing an advance to a purchase order.

It is further alleged that the said transactions were carried out at the instructions of accused Gautam Doshi and Hari Nair.
During the relevant period, the board meetings of M/s Swan Telecom Pvt. Ltd. (STPL) & TTPL were chaired by accused Surendra Pipara and he was party to all decisions taken. It shows that till October, 2007, M/s Swan Telecom Pvt. Ltd. was
an associate of companies of Reliance ADA Group, including M/s Reliance Telecom Ltd./ Reliance Communications Ltd., which held pan India telecom licenses. As such on the date of application, M/s Swan Telecom Pvt. Ltd. (STPL) was ineligible as its application was in violation of clause 8 of UASL guidelines
dated 14.12.2005 regarding substantial equity. It is further alleged that the other companies including M/s Swan Consultants Services Pvt. Ltd., M/s AAA Consultancy Services Co. Pvt. Ltd., M/s ADAE Ventures Pvt. Ltd., M/s
Giraffe/Siddhartha Consultancy Services Pvt. Ltd., M/s Sonata Investments Ltd., M/s Zebra Consultancy Services Pvt. Ltd., M/s Parrot Consultants Services Pvt. Ltd. etc., which have been used to transfer funds / hold M/s Tiger Traders Pvt. Ltd. (TTPL) and M/s Swan Telecom Pvt. Ltd. (STPL), were also associate companies of Reliance ADA Group

It is alleged that accused Gautam Doshi, Group President of Reliance ADA Group and director / board member, M/s Reliance Telecom Ltd., with others has played an active role in structuring and funding of M/s Swan Telecom Pvt. Ltd.

(STPL), TTPL and other companies. Further all important decisions regarding transfer of funds to TTPL / M/s Swan Telecom Pvt. Ltd. (STPL) through various companies were taken by him. Further the commercial decisions on behalf of M/s
Reliance Telecom Ltd. including investments in M/s Swan Telecom Pvt. Ltd. (STPL), transfer of shares to Delphi Investment Ltd., etc have also been taken by him.

It is alleged that accused Hari Nair, in collusion with accused Gautam Doshi and Surendra Pipara structured different companies. He has been instrumental in transferring of funds of Rs. 95.51 Crore and Rs. 3 Crore to TTPL and Swan Telecom Pvt.Ltd. (STPL). Besides being company Secretary of Swan Telecom
Pvt. Ltd. (STPL) Ltd., he was also on the board to various companies and also the authorized bank signatory.

As Company Secretary of M/s Swan Telecom Pvt. Ltd. (STPL), he in league
with accused Gautam Doshi and Surendra Pipara, dishonestly and fraudulently submitted false information to DOT under his signatures regarding its share holding by different companies thereby concealing the material facts, which could lead DOT to consider the company as ineligible for getting a UAS license. He
along with accused Gautam Doshi was party to different
commercial decisions taken on behalf of different companies. As such he has played active role in management of day­to­day affairs of different companies including Swan Telecom Pvt. Ltd. (STPL) and TTPL.

It is alleged that accused Surendra Pipara in league with accused Gautam Doshi and Hari Nair has prepared false minutes of board meetings of M/s Swan Telecom Pvt. Ltd (STPL) and TTPL showing appointment of one Sh. Ashok Wadhwa as Director and his presence during the meetings. He has also presided over board meetings of M/s Swan Telecom Pvt. Ltd. (STPL) when the crucial decisions regarding raising its equity, allotment of shares, applications to DoT etc. were taken by M/s Swan Telecom Pvt. Ltd. (STPL). Similarly he chaired the Board Meetings of TTPL when the company subscribed majority equity in M/s Swan Telecom Pvt. Ltd. (STPL) and funds for the purpose were arranged. As Director in STPL and TTPL, he was also representing the interests of Reliance Telecom Ltd.
Therefore, he along with accused Gautam Doshi and Hari Nair were managing day­to­day affairs of the companies during the relevant period i.e. January, 2007 to March, 2007.

It is further alleged that Ministry of Corporate Affairs has also confirmed vide a report of Registrar of Companies, Mumbai that M/s Swan Telecom Pvt. Ltd. was an associate of M/s Reliance Telecom Ltd. and M/s Reliance Communications Ltd. It is alleged that M/s Reliance Telecom Ltd., which is a subsidiary of M/s Reliance Communications Ltd., had invested in M/s Swan Telecom Pvt. Ltd. (STPL) in
form of minority equity stake and preference shares. However, the investment towards equity shares of M/s Swan Telecom Pvt. Ltd. (STPL) was within permissible limits i.e. less than 10 %. All the said persons, in league with each other, belonged to M/s Reliance Telecom Ltd. and were authorized by M/s Reliance Telecom Ltd. to represent its interests in M/s Swan Telecom Pvt.
Ltd

It is alleged that pursuant to TRAI recommendations dated 28.08.2007 when M/s Reliance Communications Ltd. Got the GSM spectrum under the Dual Technology policy, accused Gautam Doshi, Hari Nair and Surendra Pipara transferred the
control of M/s Swan Telecom Pvt. Ltd., and said structure of holding companies, to accused Shahid Balwa and Vinod Goenka. In this manner they transferred a company which was otherwise ineligible for grant of UAS license on the date of
application, to the said two accused persons belonging to Dynamix Balwa (DB) group and thereby facilitated them to cheat the DOT by getting issued UAS Licences despite the ineligibility on the date of application and till 18.10.2007

It is alleged that accused Shahid Balwa and Vinod Goenka joined M/s Swan Telecom Pvt. Ltd. and M/s Tiger Traders Pvt. Ltd. as directors on 01.10.2007 and DB group acquired the majority stake in TTPL / M/s Swan Telecom Pvt.
Ltd. (STPL) on 18.10.2007. On 18/10/2007 a fresh equity of 49.90 lakh shares was allotted to M/s DB Infrastructure Pvt. Ltd. Therefore on 01.10.2007, and thereafter, accused Shahid Balwa and Vinod Goenka were in­charge of, and were responsible to, the company M/s Swan Telecom Pvt. Ltd. for the conduct of its business. As such on this date, majority shares of the company were held by D.B. Group. M/s Siddhartha Consultancy Services Pvt. Ltd., a holding company of M/s Tiger
Traders Pvt Ltd before October, 2007, also later transferred its shares to Shahid Balwa and Vinod Goenka (5000 each).

Thereafter, accused Shahid Balwa, in conspiracy with accused Vinod Goenka, created false documents including board minutes of M/s Giraffe Consultancy Pvt. Ltd., etc, fraudulently showing transfer of its shares by the companies of Reliance ADA Group during February, 2007 itself. It is further alleged that accused
Shahid Balwa, in conspiracy with accused Vinod Goenka, either concealed or furnished false information to DOT regarding share holding pattern of M/s Swan Telecom Pvt. Ltd. (STPL) as on date of application.

It is alleged that certain complaints alleging substantial stake of Reliance ADA group in M/s Swan Telecom Pvt. Ltd. (STPL) as on date of application, were received by DOT. However, the same were not considered by the accused
Siddhartha Behura and accused A. Raja and M/s Swan Telecom  Pvt. Ltd. (STPL) was declared eligible for issuing LOI for UAS Licence.

It is alleged that accused A. Raja & Siddhartha Behura, in criminal conspiracy with accused Shahid Balwa and Vinod Goenka, Directors of M/s Swan Telecom Pvt. Ltd., abused their official position and without initiating any enquiry suggested by LF branch in respect of complaints received against M/s Swan Telecom Pvt. Ltd. and thereby allowed the said ineligible company to get LOI, UAS Licence and spectrum, despite there being sufficient material to raise doubt about eligibility of M/s Swan Telecom Pvt. Ltd. for getting UAS Licence. It is alleged that for being ineligible on date of application, many other applicants were denied Letters of Intent and thus no licences could be issued to those companies which were ineligible on the date of application

Suggested Reading –

Part 1 In depth 2G scam story Facts 2G case CBI vs A Raja and others


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Wednesday, December 27, 2017

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