The CBI has submitted its findings on cross-holding of shares of Essar in Loop Telecom to its legal wing for opinion following differences in probe between the agency and the Corporate Affairs Ministry which said the Ruias-led group held only 2.15 per cent stake in Loop Telecom and not over 10 per cent as alleged when 2G licence was granted.

Sources privy to the investigations said the entire probe had been submitted to the Directorate of Prosecution comprising eminent lawyers to give its opinion as the CBI investigation has claimed so far that the cross-holding of shares of Essar in Loop Telecom was higher than the prescribed 10 per cent, a charge denied by both the companies.

The sources said that if the legal department of the CBI concurred with the findings of the investigators, the agency would proceed for filing of charge-sheet and if there was a difference of opinion, the matter would be sent to the Law Ministry for taking a final view.

The Registrar of Companies (Mumbai) has said: “The Essar Group, directly or indirectly, held only 2.15 per cent of Loop Telecom as on September 03,2007 i.e. the date on which the application was made to DoT for UAS licence’’.

The RoC letter also said that the documents of the company do not substantiate “Associate” relationship between “Essar Group and Khaitan Group” as alleged.

The CBI has been contesting the claims of Essar and Reliance saying that both the companies held more than 10 per cent of shares in Loop and Swan when the spectrum was allocated to them, a charge rebutted by both the companies.

In a 2009 report, the Corporate Affairs Ministry had said Essar had 9.9 per cent stake while in its recent communication it said Essar’s stake was just 2.15 per cent.

According to licence norms, cross-holding of less than 10 per cent is permissible. The agency had also questioned the two versions of the Ministry in its status report filed in the Supreme Court. The CBI is investigating whether Essar used Loop as a front company to corner spectrum in violation of the guidelines.

As per ‘substantial equity’ clause of the licence, a company can not hold more than 10 per cent in two operating licensees in the same circle.

The documents submitted to the CBI include an RoC observation that Essar group has been a net borrower from Khaitan group between March 2006 and September 2007.

In a related development, the DoT asked the Ministry of Law and Justice to kindly arrange or advise the meaning or definition of the term “associate” to enable the department to take further action in the matter.