Hughes Ispat accuses DoT of playing favourites

with the government that if Evergrowth can be allowed to revive two licences without settling the dispute on the third, even they should be allowed to do the same.

The company has objected to this bifurcation in the licence as it itself has suffered in the past when the government disallowed Hughes to split its licences for Maharashtra and Karnataka into two separate companies. As a result, Hughes had to forego its earnest money and bank guarantees to the tune of Rs 50 crore and also lost the Karnataka basic circle.

Hughes had demanded, over two years ago, that it be allowed to float separate group companies so that getting financial closures for the two projects would be easier. The DoT however, turned this request down beacause when the bid was won by the company, both licences were in the name of the same company which could not be changed.

Now in the case of the cellular licences of Evergrowth however, while the Karnataka and Andhra licences have been picked up by the Bharti Group after clearing its previous dues for these circles, the Punjab circle has been kept aside with several disputes still waiting to be solved on this particular licence. As a result, Bharti has been able to buy off the two Evergrowth circles without taking on the liabilities of the Punjab circle.

The Evergrowth licence, originally belonging to the JT Mobile Group, has been disputed with regard to it Punjab arm. The DoT has pegged the outstandings of the Evergrowth group for the Punjab circle at Rs 218 crore plus interest. Evergrowth on the other hand has been holding the claim that this amount represented the fees due for a period of 693 days during which the DoT had terminated the Evergrowth licence. Since this licence was terminated by the DoT, the company did not owe any dues to the government.

The DoT on its part has been claiming that the reason the company’s licence was terminated was because between 1996 and 1998 the company had not paid its licence fees and hence had not been allowed to operate its licence in Punjab. Hence, the liability for the outstandings would have to be borne by the company for its own faults.

DoT officials defend the Evergrowth case with respect to the Hughes case on the grounds that the two are entirely different. While Evergrowth was an on-going project, Hughes had never signed the licence agreement. In fact when they were asking for permission to change the name of the company and split the companies into two for the different circles, they had only a Letter of Intent (LoI) from the government. In fact because of their failiure to sign the licence agreement, their bank guarantees had been encashed, officials explain.

Tug of War

Hughes Ispat has objected to bifurcation of Evergrowth’s licence as it itself has suffered in the past when the government disallowed Hughes to split its licences for Maharashtra and Karnataka into two separate companies. As a result, it had to forego its earnest money and bank guarantees to the tune of Rs 50 crore and also lost the Karnataka basic circle.

DoT replies: Evergrowth was an on-going project, Hughes had never signed the licence agreement. In fact when they were asking for permission to change the name of the company and split the companies into two for the different circles, they had only a Letter of Intent (LoI) from the government. In fact because of their failiure to sign the licence agreement, their bank guarantees had been encashed.