On Wednesday morning, the Delhi court rejected the bail application of Sanjay Chandra, MD, Unitech Ltd and Unitech Wireless, Vinod Goenka, MD, DB Realty and Swan Telecom (now Etisalat), Gautam Doshi, Group MD, Reliance Anil Dhirubhai Ambani Group (ADAG) and Hari Nair and Surendra Pipara, Senior Vice Presidents, ADAG.
The five top executives then moved an application seeking interim bail for one week so that they could move High Court against Wednesday's order, but the court rejected that plea too.
CBI counsel AK Singh said, "The judge officially rejected the bail application of five persons...Now they are being taken to judicial custody after their interim bail application was rejected as well...they will be in judicial custody till the granting of bail order by any superior court."
Singh said all five were at liberty to file their bail application in a higher court.
Why CBI wanted bail denied
These five men were named in the first Central Bureau of Investigation (CBI) chargesheet in the 2G scam case, but were not arrested during the investigation. But in court, the CBI sought they be denied bail, claiming that they held high positions and could influence or win over witnesses.
Opposing the bail plea last Friday, special prosecutor U U Lalit, appearing for the CBI, had also said that the five accused could abscond hampering the smooth functioning of the case.
Counsel for the accused had argued that their clients had not been arrested yet, that they had co-operated with the investigation and would comply with all bail conditions. The judge had reserved order last Friday.
Former telecom minister A Raja, former telecom secretary Siddhartha Behura, Raja's personal secretary R. K. Chandolia and Swan Telecom promoter Shahid Usman Balwa were arrested earlier during investigation in the case and are lodged in Tihar Jail under judicial custody.
The CBI has indicted Raja for conspiring with top bureaucrats, including a retired IAS officer, and corporate honchos to cause a loss of Rs. 30,984 crore to the exchequer in allocation of the 2G spectrum.
Chandra has been chargesheeted for cheating and conspiracy. The CBI believes that he came up with a plan which centred on Raja abruptly advancing the deadlines for applications for licenses by a week. Companies like Unitech allegedly benefited from this and jumped to the head of the queue.
The Telenor Group, which holds a 67.25 per cent ownership share in Unitech Wireless, has asked Sanjay Chandra to step down as the company's chairman. (Read: Telenor asks Chandra to step down as Unitech Wireless chairman)
A press release said the Telenor Group had sent a letter to Unitech Ltd. earlier this month "requesting Sanjay Chandra to step down as Chairman of the Board of Directors in Unitech Wireless. Telenor Group has asked Unitech Ltd. to appoint a substitute for Sanjay Chandra for as long as the 2G court case is ongoing in India."
The three senior executives from Anil Ambani's ADAG have been accused of setting up Swan as a front to acquire more spectrum and licenses for Mr Ambani's Reliance Telecommunications. Gautam Doshi, who is the Managing Director of ADAG, and the two other executives have been charged by the CBI with trying to conceal Reliance's stake in Swan.
The CBI has alleged that funding for Swan was organised overnight so that it could serve as a secret extension of Reliance. According to the rules, no operator could own more than 10 per cent in another company providing telecom services in the same area. Mr Doshi, Surrendra Pipara and Hari Nair used Swan to get around that rule, the CBI has alleged.
Stock prices plummet
As news of the top executives being denied bail came in on Wednesday morning, stocks of their companies fell sharply. By afternoon, Unitech stocks were trading 6 per cent lower and closed 5.1 per cent lower. The company's MD Sanjay Chandra is one of the accused sent to jail on Wednesday.
DB Realty tanked 10 per cent after the court cancelled the bail plea of Vinod Goenka, MD of DB Realty. By late afternoon the stock had recovered substantially and ended the day 4.2 per cent lower. Shahid Balwa, the company's former MD, is already behind bars.
In a statement, DB Realty said, "We would like to state that these developments will not affect the operations of DB Realty Limited in any manner whatsoever. There is no direct or indirect shareholding of DB Realty Limited in the Telecom business and the company will continue its business in the normal course." The DB statement said Goenka had delegated decision making powers to top management.
Two of the five Reliance ADAG stocks fell too, but the most affected was Reliance Communications that closed 2 per cent down. Three top officials of the company, Gautam Doshi (Group MD), Hari Nair (Senior VP) and Surendra Pipara (Senior VP) had their bail plea rejected on Wednesday and were sent to jail.
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