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The Department of Telecom (DoT) has taken the view that ByCell cannot claim protection under any bilateral investment treaty because security concerns override all commitments. It has told an inter-ministerial panel that the company’s licences were cancelled due to security concerns and the bilateral treaty itself provides for such actions by governments. It added that the High Court had rejected ByCell’s appeal after which the company did not appeal in the Supreme Court.
“Article 3 of the India-Russia bilateral investment treaty and Article 12 (2) of Cyprus-India treaty clearly state that the provisions of the agreements shall not preclude the application by either contracting party of measures necessary to safeguard its essential security interest. Hence there is no breach of any bilateral treaty,” a senior DoT official told Business Line, drawing a distinction between Bycell and other foreign investors, such as Telenor and Sistema, whose licences have been cancelled by a Supreme Court order.
ByCell had sent a legal notice to the DoT threatening legal action in the international tribunal. The telecom department had earlier revoked the licences issued to ByCell following concerns raised by the Home Ministry about the company’s shareholding and source of funds. DoT had issued a letter of intent to ByCell in five circles. However, the company’s plans got stuck after the Home Ministry asked the Foreign Investment Promotion Board to review its clearance to the Switzerland-registered telecom company.
ByCell is promoted by Russian nationals through a Cyprus-based company, Tenoch. Tenoch owns 97 per cent stake in ByCell Holdings AG, a Swiss company, and this entity owns 73 per cent stake in ByCell India. The company, which had received letters of intent for telecom licences in five circles, has a joint venture with Hyderabad-based Bitcorp Pvt Ltd. In an internal note to the inter-ministerial panel, the DoT has stated that according to the Ministry of Home Affairs, the promoters’ background looked suspect in that some of the shareholders have been allegedly involved in funnelling funds through illegal channels.
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