The Department of Telecom may reject the $166 million in damages claimed by Loop Telecom on grounds that the company was given a chance to protect its investments by participating in the spectrum auction.
Loop Telecom was one of the players whose licence was cancelled by the Supreme Court following the 2G spectrum scam. One of the investors in the company, Khaitan Holding (Mauritius) Ltd, had claimed damages under the bilateral investment protection treaty between India and Mauritius.
The treaty provides for compensation for any unreasonable or discriminatory decisions which impact investments.
However, an internal DoT note seen by
“If we can establish that the investment was not made in accordance with the laws and regulations of India, the bilateral treaty will not apply,” it said.
Others backtrack
Other foreign players impacted by the Supreme Court’s decision, including Telenor and Sistema, had also claimed protection. But these companies have put the issue on the backburner after they bought back spectrum in the auctions held in November 2012 and March this year.
Loop Telecom, on the other hand, told the Government that if its request for compensation is not accepted, it would start arbitration proceedings.
The company had set a deadline for September 16 for the Government to respond. But the company has not yet started any legal proceedings because the DoT has not given its final decision on the matter.
Seeks clarification
The DoT has, in fact, asked the company to provide clarification on a number of issues, including supporting documents for the losses the company has claimed, foreign equity holding, proof of investments made and audited financial statements.
“In the letter dated April 5, 2013, claimants (Khaitan Holding) have sought $166.88 million towards its lost direct investment. This amount comprises $139.71 million towards principal and the remaining amount relates to interest calculation. The claimant has not given any financial/back-up documents to show whether the amounts genuinely entered India and, therefore, we are unable to verify the amounts claimed,” the note stated. DoT will take a final decision on the issue after the investors respond to questions.
Loop had also written to Prime Minister Manmohan Singh and other government officials proposing a settlement under which it would not challenge the court’s ruling or seek compensation if the Government refunded the Rs 1,454 crore paid as licence fee, released performance and bank guarantees, dropped all charges involving the company and its associates.