‘No allegations of security issues against Red FM’

Delhi HC quashes Centre’s decision to deny clearance

July 28, 2015 12:00 am | Updated 07:17 am IST - NEW DELHI:

The Delhi High Court, which allowed Red FM run by Digital Radio Broadcasting Limited to take part in the stage-III FM radio waves auction on Sunday, has said the company had been operating since 2002 without facing any allegations that its functioning had resulted in any security concerns.

The Kalanithi Maran-promoted Sun TV has a stake in Digital Radio Broadcasting Limited. Giving detailed reasons for its judgement delivered at a special sitting, a Division Bench of the High Court said here on Monday that Kalanithi Maran and his brother Dayanidhi Maran do not have controlling interest in Red FM, which vests with Rao-Reddy group, against whom there are no allegations.

“It is not alleged that Mr. Dayanidhi Maran has any interest (direct or indirect) in the shares (ownership) of the two petitioner companies (Digital Radio of Delhi and Mumbai). None of these two individuals is a director in the petitioner companies,” said the Court in its 29-page judgment.

The Bench, comprising Justices B.D. Ahmed and Sanjeev Sachdeva, said there was no allegation that Digital Radio, which runs Red FM in Delhi and Mumbai, was created as a camouflage to shield people exercising control over it from any liability.

In its verdict, the Court has quashed the Union Government’s July 15 decision that denied security clearance to Red FM, on the basis of which its application to participate in e-auction was rejected.

The rejection came following the Home Ministry's refusal to give it clearance on the ground that Mr. Kalanithi Maran, a shareholder in the radio channel, was facing prosecution in a money laundering case.

The Court said even when the cases against the Marans were registered in 2011, the petitioner companies continued to operate their radio channels without any objection concerning any security issues.

They also got extensions of their licenses by six months as recently as on March 31this year without any security concerns being raised.

“Though Mr. Kalanithi Maran may have an indirect interest in the shareholding of the two companies to the extent of 21.6 per cent in each, the controlling interest vests with the Rao-Reddy group. As such, the pre-conditions for piercing the corporate veil are not satisfied,” said the Bench.

However, the Court said it was not touching upon the policy of requiring a security clearance and not sitting in appeal over the Centre's decision on the security angle assessment about Maran brothers.

The Court has said there was no allegation that

Digital Radio, which runs Red FM in

Delhi and Mumbai, was created as a camouflage to shield people exercising control over it from any liability

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