Unitech soars 6% after winning case against Telenor

Shares of Unitech surged over 6% in trade on Thursday after CNBC-TV18 reported that the real estate developer has won a case against its JV partner Telenor in Company Law Board (CLB).

Unitech and its estranged telecom partner Norway's Telenor last month had exchanged proposals inside the closed chambers of the CLB Chairman on probable sale or purchase of shares in their joint venture company Uninor.

Unitech counsels during argument told CLB that Telenor, which holds majority stake in Uninor, had invoked arbitration under Share Subscription Agreement to seek damages and indemnity, but was rescinding Share Holders Agreement.

Telenor which holds about 67.25% stake in Uninor has held Unitech responsible for the breach of warranties related to the cancellation of JV firm licences by Supreme Court and wants to the realty from Uninor after the verdict. It has served notice to Unitech for indemnity claim.

Unitech's move to seek Arbitration has been opposed by Telenor and Uninor. Telenor Counsel in CLB has earlier argued that Unitech has no right to seek arbitration as they have filed petition before the CLB.

Citing various judgements and court cases, Telenor counsel has said once plaintiff files a suit, it has no right to refer the case for arbitration.

However, Unitech counsel contested some of the judgements that were cited by Telenor and said that the situation in cases cited by Norwegian firm are not similar to that of ongoing case between Unitech and Telenor at CLB. The counsel further argued that the arbitration application made by Unitech is indication that company has willingness to seek arbitration and depends on the decision of court.

Sources say Telenor's plan to buy Unitech for Re 1 gets thwarted with the CLB order. Now, the matter will be decided via arbitration, which will be fair but a lengthy process.

"While (we) will now consider our next legal options, it is very clear that Telenor Group will do all that is necessary to secure the future of Uninor's employees, customers and partners," a Telenor spokesman said in a statement to Reuters.

Telenor will have to resolve this before they get new partner as proposed. Asserting that it is in India for a long-haul race, Norway-based Telenor Group declared that it would indeed participate in the Supreme Court-ordained auction for the 2G spectrum by teaming up with a yet-to-be identified new local partner. It would have a majority 74% in the still-to-be-formed new company.

The Norwegian Group had already moved the Foreign Investment Promotion Board (FIPB) seeking approval for its proposed new joint outfit and investment.

However, investment analyst SP Tulsian is not too excited about the news. "Firstly, Unitech wanted USD 150 million for their 32-33% stake in the telecom company, while the foreign partner Telenor was offering peanuts. So, I don't know whether now the matter will be referred to the arbitration, which can be heard only in the Singapore or in the overseas court, which itself will be a very expensive, and long drawn process," he told CNBC-TV18 in an interview.

source: http://www.moneycontrol.com/news/business/unitech-soars-6-after-winning-case-against-telenor_691741.html?utm_source=MC_INMAIL_NEWS