Delhi High Court asks Centre to reply on Red FM’s plea

The Delhi High Court today sought the Centre’s response on a plea by Digital Radio Broadcasting Ltd, which runs Red FM, against the government’s decision denying it permission to participate in the third phase of FM auction.

A bench of justices Badar Durrez Ahmed and Sanjeev Sachdeva also permitted Red FM, a company associated with Kalanithi Maran-promoted SUN TV, to participate in the mock auction scheduled for today.

The court issued notices to the Information and Broadcasting Ministry and sought its reply by July 24 when the bench will hear the matter.

Meanwhile, the central government standing counsel Sanjiv Narula told the court that the ministry was not in favour of deferring the auction, which is currently scheduled for July 27, as the entire process takes two-three months and everything has been lined up.

The counsel also said that the government had extended the stage II licences till September this year only after which the channels would have to migrate to stage III.

Narula also said that the government is looking into who is controlling the company and where it gets its funds from for which it was necessary to look into the shareholding.

The bench was of the view that if the government wanted to look into shareholding, it should have said so in the tender document. “It should have been spelt out in black and white,” it said.

The government’s submissions came in response to the court’s query yesterday whether it was willing to defer the auction process so that the matter can be heard properly.

Yesterday the court had termed as “vague” and open to “misuse” the Centre’s process for granting security clearance to radio channels for participating in stage III FM auction.

The court had said “things are not spelt out as to what you (Centre) mean by security clearance. The clause (requiring company and directors of radio channel to be security cleared) is vague. It can be misused.

“Nobody knows what you mean by security clearance…In a democracy, you have to move towards greater transparency and not secrecy,” the bench had said to the government after it had contended it is not required to inform the company about the criteria of security clearance.

Digital Radio’s application to participate in the auction was rejected as it was not given security clearance by the Union Home Ministry on the ground that Kalanithi Maran, a shareholder in the radio channel, was facing prosecution in a money laundering case, as per their plea.

The radio channel had told the court that it was wrongly disqualified from participating in stage III of FM auction on the ground of money laundering cases against Maran family as former Union Telecom Minister Dayanidhi Maran was in no way connected to it and Kalanithi Maran indirectly held 22 per cent stake in the company.

It had also argued that neither of the Maran brothers was convicted of any offence nor were they controlling the company for disqualifying them from auction process.

The company had also said none of its promoters has been convicted of any offence of money laundering or moral turpitude.

Red FM had submitted that it will have to shut operations if it was not allowed to participate in the auction as its stage II licence expires in September this year and it has to migrate to stage III.

It has sought a stay of the auction or in the alternative permission to participate in the same.

Entertainment Network India Ltd (ENIL), which runs Radio Mirchee, had intervened in the matter and said “conditional participation” be not allowed as it could affect the final outcome of the auction, especially if Red FM is not successful in the present petition.

Red FM, in its plea, has challenged the clauses in the tender documents which require that “the company as well as all Directors on its Board shall be security cleared and the respondent (Centre) shall take security clearance of the company and its directors from relevant government authorities”.

It has said these clauses are violative of its fundamental rights and sought that they be quashed.

The company has also sought setting aside of the Centre’s July 15 order by which their application for permission to bid in the auction was rejected.

Red FM has also said if it was unable to participate in the auction, it will not be able to bid for new stations/ frequencies in the country and thus “would have to shut down its business of FM Radio resulting in a loss of 200 jobs, Rs 84.36 crores invested by it” and huge loss to the exchequer.