Madras High Court strikes down I&B ministry’s order on e-auctions

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India Legal Bureau

The Madras High Court recently asked the central government to announce the names of successful bidders of FM Station Phase III e-auction, subject to conditions being fulfilled by the applicants.

It also struck down the order of the Ministry of Information and Broadcasting against Sun TV Network and its allied radio broadcasters. The order had debarred them from participating in the e-auction.

The denial by the I&B ministry was on the basis of the home ministry’s decision not to allow the Sun TV group to bid in the e-auction due to “security reasons”. There are cases of money laundering and illegal gratification pending against Dayanidhi Maran (when he was telecom minister in the UPA government) and his brother Kalanithi Maran.

The High Court held that there was no bar against e-auction applicants who had criminal cases pending against them. It clarified that the bar exists only for those who have already been convicted.

Taking the argument forward, the Court observed that the “accused is presumed to be innocent, unless the guilt is proved beyond reasonable doubt…”.

Further, the court noted that neither the companies nor any of the other directors had any cases against them and Dayanidhi Maran is not a director or a majority shareholder in the companies.

It also refused to apply the “pierce the corporate veil” criteria to ascertain Dayanidhi Maran’s connection with the companies. The Court pointed out that the law on “piercing the corporate veil” applies only when a company is set up in order to “camouflage” wrongdoing by the people behind it.

In this case, the Court clarified that the companies were set up well before the cases against the Marans commenced and there were no allegations of any wrong doing by the companies. Hence, it would be wrong to use “security clearance” as an excuse to block their participation in Phase III activities.

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