Simmering differences between the joint venture partners of Hutchison-Essar on Wednesday boiled over in public, with Hutch dragging Essar to the Bombay High Court over termination of a deal to sell BPL Mobile to it.
MUMBAI: Simmering differences between the joint venture partners of telecom company Hutchison-Essar boiled over in public on Wednesday, with Hutch dragging corporate giant Essar to the Bombay High Court over termination of a deal to sell BPL Mobile to it.
Hutch moved the High Court on Wednesday contending that Essar's notice terminating the merger of BPL Mobile (Mumbai circle) into Hutchison-Essar was "unlawful."
The court posted the matter for further hearing on Thursday.
Differences between the joint venture partners Hutichson Whampoa and Essar had surfaced last year, with both trying to consolidate their position in the country's third largest private telecom company that has a pan-India footprint.
While the two came face-to-face for buying out small equity holders, including Hindujas, which finally sold its 5.11 per cent stake in the telecom company to Hutchison last month, Essar fired a missive questioning the transfer of some equity by the foreign partner to a third foreign company Orascom on the ground of national security.
Hutch's move on Wednesday follows termination of the deal to sell BPL (Mumbai) by Essar on the grounds of not getting necessary approvals -- a claim contested by the government.
Department of Telecom sources said that no prior approval was required for the merger and the fact that the two parties have gone to court was ample evidence that there were internal disputes.
Following the termination notice, Essar had decided not to sell the BPL cellular business in the coveted Mumbai circle to Hutch-Essar, a company in which it holds about 33 per cent stake.
Essar had bought BPL Mobile at an enterprise value of 1.1 billion dollars last year. The deal was later extended to Hutchison Essar for the eventual merger into the JV. The deal for three circles---Maharashtra and Goa, Tamil Nadu and Pondicherry and Kerala concluded in January.
When contacted, an Essar official said that as per the agreement if the approval did not come by the due date (July 31), either party could terminate the agreement. We have done exactly that as the approval from the Government did not come by that date, he said.
Hutch officials did not disclose the plea under which they had moved court against the notice, saying the matter is now subjudice.
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