The Essar Group has written to the Communications and IT Minister, Mr Kapil Sibal, that its equity stake in Loop Telecom did not violate telecom licence conditions.
The Essar Group has said that it held only 2.15 per cent shares of Loop, which was below the threshold limit of 10 per cent permitted under the licence.
‘alter ego' notion
The letter comes after the Central Bureau of Investigation sought the opinion of the Attorney-General on whether Loop Telecom was the ‘alter ego' of Essar Group. “It appeared that the CBI was seeking to import the doctrine of ‘alter ego' to link Loop with Essar. This notion of ‘alter ego' is general doctrine that lacks precision and clarity and thus cannot be imported into criminal jurisprudence in this fashion,” Essar said in its letter to Mr Sibal.
A parent corporation is considered as the alter ego of a subsidiary corporation if it controls and directs its activities so that it will have limited liability.
The Essar Group has said that the CBI has shifted the allegations against the company to the whole new level by suggesting that Essar was an alter ego of Loop.
“The theory of alter ego has to be applied in India with great caution. Importing American jurisprudence into Indian fiscal jurisprudence or commercial jurisprudence has not been accepted by Indian courts. To leapfrog to the conclusion of commission of criminal offences on the basis of such a jurisprudence would be totally untenable,” Essar said.
The company added that the Telecom Ministry should take a hard look at these incorrect charges with disregard to the irreparable harm and damage it can cause to Essar and India's commercial interest.