The Ruias are contemplating approaching the Ministry of Company Affairs for its views on the Right of First Refusal (RoFR) clause in their shareholders' agreement with Hutchison Telecom International Ltd (HTIL).
According to sources in the know, Essar has obtained a strong endorsement of its stance on the shareholders' agreement from noted lawyer Harish Salve. Simultaneously, the Ruias are continuing talks with HTIL to reach common ground on the issue. When contacted, an Essar spokesperson said, "We have sought legal opinion, which endorses our view. But we are not going to court."
Serious differences have arisen between the two partners in Hutchison Essar Ltd on the interpretation of the RoFR clause.
HTIL has pointed out that the Ruias have the first right of refusal only if Hutchison's stake falls from the existing 67 per cent to below 40 per cent "and" it sells more than a 10 per cent stake to Reliance, Tata or Bharti.
It has said that the operative word in the agreement is "and," which means that both conditions have to be triggered simultaneously for the Ruias to exercise the clause in their favour.
Meanwhile, HTIL said the Indian partner's consent for sale of equity in Hutch-Essar was needed only if it involved certain telecom players in India and not for a deal with others.
Quoting a HTIL spokesperson, PTI said, "RoFR exists in the limited case of a sale (of equity in the venture) to certain Indian telecom companies. There is no RoFR over any other buyer."
Asked about the HTIL statement, an Essar spokesperson told agency: "We do not wish to comment on the shareholders' agreement."
Meanwhile, Reliance Communications sources have indicated that its bid for Hutch-Essar will meet all regulatory norms with regard to mergers and acquisitions in the telecom sector.
In the event of Reliance overcoming a strong challenge from British telecom giant Vodafone, the company would have over 52 million subscribers, or 36 per cent of the Indian market.
