In a big setback to Aditya Birla group firm Idea Circular , the Delhi High Court today said the six licences of Spice Communications would not be transferred to Idea, which acquired it in 2008, as the company did not comply with the licence and merger guidelines. The court also slapped a fine of Rs 1 crore for not giving the correct information to the court.

Passing the judgement on the merger application of Idea and Spice, the high court said Idea had not put the rejection letters by DoT on merger of licence and did not place on record the relevant documents.

“It is directed that notwithstanding anything stated in the sanctioned scheme and in the order dated February 5, 2010, the six overlapping licences of the Spice would not stand transferred or vested with Idea till prior permission of DoT is obtained,” said Justice Manmohan in his 51-page order.

The high court further said that it is “of the view that costs should be imposed on Idea for not bringing to the notice of this Court the rejection letters dated January 7, 2010 and January 18, 2010 issued by DoT and for not placing on record relevant and material documents like Licence, Merger Guidelines and correspondence exchanged between the parties.”

Directing Idea to pay Rs 1 crore to the Department of Telecom (DoT) within six weeks, the high court said, “The suppression of documents was not an innocent act especially in view of petitioners own understanding of licences and merger guidelines as reflected in the contemporaneous correspondences”.

The company bench of the high court further said that till DoT gives its permission to Idea to use the licences of the Spice Communication, the “overlapping licences of Spice shall forthwith stand transferred with DoT. The spectrum allocated for such overlapping licences shall also forthwith revert back to DoT.”

It further said that as Idea has used the overlapping licences without any prior permission of DoT from February 5, 2010 till date “in contravention of the Licence and Merger Guidelines, it is directed that it shall be open to DoT to pass any order for such breach”.

The court also directed the DoT to ensure that the customers of two circles — Punjab and Karnataka — where the licences of Spice were operational shall not suffer due to interruption of service.

The high court’s order came over an application filed by DoT requesting it to recall and stay its earlier order allowing the amalgamation of Spice Communication with Idea Cellular.

Earlier on February 5, 2010, the high court sanctioned the merger scheme of Spice with Idea. However, after  DoT made an application, it stayed the entire scheme on March 30,2011. Later, Idea and Spice moved applications to vacate the order. However, keeping in view of the urgency of the matter, the high court directly started the final hearing on the
dispute.

Spice had six licences at the time when Idea bought for Rs 2,176 crore in June 2008, the BK Modi-promoted Spice and two were overlapping with the Aditya Birla group firm.

DoT has submitted that merger was impermissible as some of the overlapping licences are less than three years old.