Etisalat takes Swan telecom promoter Shahid Balwa to court

The Emirates Telecommunications Corporation - Etisalat on Thursday initiated a civil action in the Bombay High Court against Swan Telecom promoter Shahid Balwa, DB Group chairman Vinod Goenka and Majestic Infracon for alleged fraud and misrepresentation..“Etisalat’s case is that it was induced into its investment in the company that was then Swan, without any disclosure of the matters that are now alleged by the CBI and Supreme Court to have occurred in connection with the obtaining of 2G licences by EDB. Those events occurred a year before Etisalat’s investment,” the Emirate company said in a statement..“Etisalat is facing very significant financial losses on its investment in Etisalat DB despite having no involvement in the 2G license application or award process and being entirely innocent of any allegations relating to it,” the statement adds..The statement adds that Mr Balwa, Mr Goenka and Majestic Infracon Pvt Ltd were responsible for Swan at that time and for subsequently marketing the investment opportunity to Etisalat..In a statement late evening on Thursday, Balwa, Goenka and Majestic Infracon said that no notice of demand or suit papers was received by them.."There is no wrongdoing by us or our directors. We had filed a case for mismanagement in the CLB against Etisalat who were in management control of the joint venture or JV company. This was withdrawn because in discussions they said they would run the JV properly which was not done. Unlike other similar JV's who built a business and revenue, our JV went nowhere under Etisalat management. The JV company is also facing FEMA proceedings for the investments by Etisalat. All this will be gone into. Etisalat will be held responsible for their wrongful acts," the statement from Shahid Balwa, Vinod Goenka and Majestic Infracon said. .Meanwhile, shares of DB Realty fell over 4 per cent to Rs 85.15 on the Bombay Stock Exchange on Thursday. In contrast, the BSE Sensex traded 0.26 per cent lower at 18,097 at 1145 hours..In a statement late evening on Thursday, DB Realty clarified that DB Realty was in the business of real estate development and had no direct or indirect share holding in Etisalat DB.."The promoters of DB Realty in their individual capacity invested in Etisalat DB, a company engaged in telecom business. Both the entities are separate and have nothing to do with each other at all," the DB Realty statement said..It also said that Etisalat’s decision to shut down the operations of its Indian joint venture, was taken independently by Etisalat UAE and this decision will have no bearing or impact on the financials of DB Realty.."No suit or claim has been filed against DB Realty since it was never party to any agreements or otherwise. DB Realty was and remains an independent corporate entity managed by a professional team," the statement adds. .Earlier, on Wednesday, the Abu Dhabi-based telecom operator had said that it would shut down its India operations that were part of a telecom joint venture with the the DB Group..The Supreme Court on February 2 had cancelled 15 licences held by its joint venture Etisalat DB, as part of an investigation into the grant process for 2G licences. The apex court cancelled a total of 122 licences, affected eight telecom operators.The Etisalat board's decision, which was unanimous, will affect about 1.67 million subscribers that Etisalat DB has, mostly in northern India; they will get 30 days to transfer to a different service provider. In addition, all of Etisalat DB employees will be laid off..The pullout will also impact about Rs 2,500 crore in bank loans to the company..Etisalat earlier this month booked an impairment charge of $827 million on its Indian operations, leading to a 24 per cent drop in its net profit..In 2008, Etisalat bought a 45% stake in Swan Telecom for $ 900 million. At the time, Swan was promoted by the DB Group.

Etisalat takes Swan telecom promoter Shahid Balwa to court

As credit demand slackened, domestic banks investments in government-backed securities grew faster than their loan portfolios, the central bank said.

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